Preamble

The House—after the Adjournment on 27th March 1929, for the Easter Recess—met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Llanelly Corporation Bill.

Lords Amendments considered, and agreed to.

Metropolitan Water Board Bill.

As amended, considered.

Ordered, "That Standing Orders 223 and 243 be suspended, and that the Bill be now read the Third time."—[The Chairman of Ways and Means.]

Bill accordingly read the Third time, and passed.

Winchester Water and Gas Bill.

As amended, considered; to be read the Third time.

Birmingham Corporation (Rivers Improvement) Bill [Lords].

Read a Second time, and committed.

Oral Answers to Questions — INDIA.

EMPLOYMENT UNDERGROUND (WOMEN).

Sir ROBERT THOMAS: 1.
asked the Under-Secretary of State for India, if he will give the latest figures showing the total number of women employed underground in coal, salt, and other mines in India; whether the mine owners have yet consented to the entire elimination of female employment underground within a certain period; if so, what is the period agreed upon; and are there any owners who still stand out?

The UNDER-SECRETARY of STATE for INDIA (Earl Winterton): The average number of females employed daily underground in mines under the Indian Mines Act for the year 1927 was 31,850. As regards the second part of the question, the matter has not been left to the voluntary action of the owners, but the Government of India have made statutory regulations under the Act prohibiting, with effect from 1st July, 1929, the employment of women underground in mines other than coal mines in Bengal, Bihar and the Central Provinces, and in salt mines in the Punjab. In the exempted mines the percentage of women among those employed underground, both men and women, is to be reduced progressively from 29 per cent. for coal and 40 per cent. for salt mines in 1929–30 to nil on 1st July, 1939.

Mr. WARDLAW-MILNE: Is my right hon. Friend able to say whether the Government of India has fully considered and allowed for the well-known reluctance of many of the male colliery workers in Bengal to go underground unless accompanied by the female members of their families?

Earl WINTERTON: I am well aware of the existence of the custom and the circumstances have all been taken into consideration.

Mr. SAKLATVALA: Cannot the Government put an end more quickly to the employment of women underground, in view of the fact that in all other industries millions of men are employed without their wives insisting on going with them?

Earl WINTERTON: The whole matter has been considered, and legislation has been passed. My answer shows that in a very large number of cases the employment of women will be forbidden altogether from 1st July this year. It is not possible to go into it in answer to a question, but the reduction can only be made progressively in this way.

Mr. PALING: How many women will be working underground after this new Act comes into operation?

Earl WINTERTON: I can give the percentage, but not the actual figures. That would be a matter of estimate. I doubt if it would be possible to obtain them, but, if the hon. Member will put a question down, I will see what can be done.

DETENUS.

Mr. THURTLE: 2.
asked the Under-Secretary of State for India if he is now in a position to state the intentions of the Government of India in regard to the persons at present under detention without trial under Regulation 111 of 1818?

Earl WINTERTON: The case of the three Sikhs detained under Regulation 111 of 1818 has received the close consideration of the Government of India, who have decided to release them as soon as this can be done without danger to the public safety. As regards the other detenus, the Government of India intend at present to continue their detention.

Mr. THURTLE: Can the Noble Lord specify any time when these men will be
released? Is he aware that they have already been in prison for more than six months without trial? Is it not time something was done?

Earl WINTERTON: The hon. Member has already heard the views of my Noble Friend and the Government of India on several occasions. I can give no undertaking at all when they will be released.

Mr. SAKLATVALA: Will the Noble Lord explain, when the Government in Great Britain and other parts of the Dominions is competent to take care of the safety of the country—

Mr. SPEAKER: Lieut.-Commander Kenworthy.

MOSUL OILFIELDS.

Lieut.-Commander KENWORTHY: 3.
asked the Secretary of State for the Colonies if he can report any progress in the development of the oilfields in Mosul; and whether any progress has been made with the project for the construction of a pipe line from these oilfields to the Mediterranean?

The SECRETARY of STATE for the COLONIES (Mr. Amery): As regards the first part of the question, I have nothing to add to the reply given to the hon. and gallant Member on 11th March. As regards the second part of the question, I am not aware what amount of progress has been made, but I understand that the matter is now under the active consideration of the company.

Lieut.-Commander KENWORTHY: Is it the policy of the Colonial Office to urge the development of this oilfield?

Mr. AMERY: The Colonial Office is naturally anxious to see it developed.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman urging its development in view of the rising price of petrol?

Colonel WEDGWOOD: Has an agreement yet been come to by the various interests concerned as to whether the pipe line should come out at Haifa or at Alexandretta?

Mr. AMERY: No, that is for the company itself.

Colonel WEDGWOOD: Is it not a fact that the British Government partly controls the capital invested in the company?

GIBRALTAR (LEAFLET SUPPRESSED).

Mr. KELLY: 4.
asked the Secretary of State for the Colonies who gave directions to the Colonial Secretary and the chief of police at Gibraltar to confiscate and suppress the newspaper, Hojas Libres?

Mr. AMERY: I have now received a report from the Governor on this matter. It appears that the publication in question is not a newspaper but a revolutionary leaflet in the Spanish language printed in France and directed exclusively against the Spanish Government. Supplies have been introduced into Gibraltar on three occasions and, on the authority of the Governor, were seized when placed on sale. In the circumstances the Governor's action has my full support.

Mr. KELLY: Who has decided that this is a revolutionary paper, in view of the fact that the articles are much milder than those published in papers belonging to the party of the right hon. Gentleman?

TRADE AND COMMERCE.

EMPIRE MARKETING BOARD.

Mr. DAY: 5.
asked the Secretary of State for Dominion Affairs what was the total amount of expenditure defrayed by the Empire Marketing Board in staging an exhibit at the last Canadian exhibition?

Mr. AMERY: The total expenditure met from the Empire Marketing Fund in staging an exhibit at the Canadian National Exhibition in Toronto in 1928 was £18,919 16s. 8d.

Mr. DAY: Does the right hon. Gentleman think that expenditure was justified?

Mr. AMERY: Yes, very fully justified.

Mr. DAY: Why has it been decided not to have another exhibit this year?

Mr. AMERY: The fact that participation proved to be fully justified in one year does not prove that it is necessarily justified to participate every year.

Sir HARRY BRITTAIN: Is it not a fact that this is one of the most successful exhibitions in the whole Empire?

STATISTICS.

Commander BELLAIRS: 14.
asked the President of the Board of Trade what was the balance of trade in manufactures between this country and foreign countries in 1927 and 1928, respectively, excluding re-exports; what were the similar figures for our trade with the Empire; and what proportion of the imports of foreign manufactures were subject to a duty where there was no corresponding Excise Duty?

The PRESIDENT of the BOARD of TRADE (Sir Philip Cunliffe-Lister): During the year 1927, the exports of United Kingdom goods classed as wholly or mainly manufactured, consigned to foreign countries, amounted to £288,300,000, the retained imports of the same classes of goods consigned from foreign countries were £269,200,000, and the excess of exports over imports was thus £19,100,000. For the same year, the corresponding figures for the trade in manufactured goods with British countries overseas are: exports, £275,600,000; retained imports £28,200,000; giving an excess of exports over imports of £247,400,000. The above figures are exclusive of manufactured food, drink and tobacco. Similar data are not yet available in respect of the year 1928. The declared value of the imports of goods wholly or mainly manufactured subject to Customs Duties (excluding goods subject to the Silk and Artificial Silk Duties and to the duties on playing cards and matches), which were retained for consumption in the United Kingdom during 1927, and on which the full rate of duty was paid, was approximately £17,500,000, or about 6½ per cent. of the value of the retained imports in that year of manufactured goods consigned from foreign countries.

ARTIFICIAL SILK INDUSTRY.

Mr. KELLY: 21.
asked the Financial Secretary to the Treasury the number of Inland Revenue officers engaged in artificial silk factories; if it is part of the duties of these officers to decide on questions of building extension or alteration; and is it the work of these officers to approve or otherwise as to the installation of new machines in such factories?

The FINANCIAL SECRETARY to the TREASURY (Mr. Arthur Michael Samuel): The number of officers of Customs and Excise who are employed solely in artificial silk factories is 32. As regards the second and third parts of the question, the duties of the officers in connection with building extension or alteration and the installation of new machines in the factories are confined to reporting thereon to the Commissioners of Customs and Excise. The Commissioners must satisfy themselves that the general lay-out of buildings and machines permits the officers to take a correct account for duty purposes of all the artificial silk produced on the factory premises.

Mr. KELLY: Can the hon. Member say why this duty is imposed on these officers, seeing that they have no training or qualification to decide on machinery or buildings?

Mr. SAMUEL: I assume that the Commissioners have satisfied themselves that these officers are competent to perform the duties.

Mr. KELLY: Is it known to the hon. Member that there are many complaints from directors and manufacturers that these concerns are being held up by these officers?

Mr. SAMUEL: It does not follow that the officers are incompetent to perform the duties.

SMALL HOLDINGS.

Sir H. BRITTAIN: 6.
asked the Minister of Agriculture whether he has any statistics to show the existence of an unsatisfied demand for small holdings; and, if so, what steps are being taken by the responsible authorities to meet it?

The MINISTER of AGRICULTURE (Mr. Guinness): The number of unsatisfied applicants for small holdings and cottage holdings on the lists of county and county borough councils in England and Wales on 31st December, 1928, was approximately 5,500. Powers have been conferred on councils by the Small Holdings and Allotments Act, 1926, to enable them to provide further holdings, with the aid of contributions from the State in cases where an annual loss is expected to result. The circumstances are not at
present altogether favourable to any great activity; nevertheless, schemes have been approved for the provision of upwards of 300 new holdings, and in addition many applicants are being settled as vacancies occur on councils' existing estates, which comprise about 28,000 holdings. Advances have also been made to about 100 applicants to enable them to purchase holdings from private owners.

Colonel WEDGWOOD: Could not the steps taken include making the land cheaper and more accessible to labour? Is the right hon. Gentleman including in these steps any method of getting the land more cheaply?

Mr. GUINNESS: The land is bought at a fair price, and I certainly do not recommend any steps for taking it over on terms which would involve serious injustice to the present owners.

GOVERNMENT DEPARTMENTS (FUEL).

Sir R. THOMAS: 7.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, if he will state the approximate quantity of fuel consumed annually in the office grates of Government Departments in London; have any steps yet been taken to substitute coalite or other smokeless fuel for raw coal; and, if not, whether he will take action so that these public institutions may give a lead to private citizens in this matter?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Lieut.-Colonel Sir Vivian Henderson): The quantity of fuel consumed in the office grates of Government Departments in London is approximately 15,000 tons per annum. Coalite and other smokeless fuel have been used since the early days of manufacture, and tests are continually being made of new fuels which come into the market.

ROYAL PARKS (STICKLEBACKS).

Captain FRASER: 8.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, if he will consider stocking the waters in the Royal Parks with small fry in order that London boys
may have the opportunity of enjoying the sport of catching them; and if he will consult with the parks department of the London County Council as to the desirability of their taking similar action in regard to the waters under their control?

Sir V. HENDERSON: There is already a stock of sticklebacks in the waters in the Royal Parks, and children are not prevented from catching them, but as this pastime is attended with some measure of danger to the children, it is not encouraged. I understand that the conditions and practice holding good in the London County Council parks are similar to those in the Royal parks.

Captain FRASER: Will the hon. and gallant Gentleman ask the Department to encourage both the fish and the little fishers?

Sir V. HENDERSON: I do not think any encouragement that could be given would benefit the children, but only the waterfowl.

RADIUM SUPPLIES.

Lieut.-Commander KENWORTHY: 9.
asked the Minister of Health what action he proposes to take on the Report of the Sub-Committee of the Committee of Civil Research on radium and radium supplies; and whether any steps are in contemplation to encourage the production of radium independently from Empire resources?

Dr. VERNON DAVIES: 26.
asked the Prime Minister whether he is now in a position to state the intentions of the Government with respect to the Report of the Sub-Committee of the Committee of Civil Research on Radium?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Sir Kingsley Wood): I understand that my right hon. Friend the Prime Minister intends to make a full statement on this matter to-morrow.

Lieut.-Commander KENWORTHY: Will that be in answer to a question and will there be an opportunity for debate?

Sir K. WOOD: That is a matter for the Leader of the House.

CHINA (SITUATION).

Commander BELLAIRS: 11.
asked the Secretary of State for Foreign Affairs whether he can make a statement as to the state of affairs in China; whether the Japanese Government has now released the rolling stock belonging to Chinese railways; and, if so, on what date it was released and on what date it was first seized?

The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Austen Chamberlain): On 26th March a mandate amounting to a declaration of war against the Wuhan authorities was issued by the National Government. Owing to the defection of a considerable portion of the Wuhan forces, the ensuing hostilities involved very little fighting and resulted in an almost bloodless victory for the National Government, whose troops entered Hankow on 5th April. The turnover was effected peacefully, and so far as I know no harm was suffered by British persons or property. At the same time the Kwangsi troops were peacefully evacuated from Canton and the province of Kwangtung. Chefoo was captured by General Chang Tsungchang on 27th March, the city remaining quiet. Reputed Communists from the province of Kiangsi made an incursion into south-western Fukien in the latter part of March. They captured the town of Tingchow and destroyed part of the property of the London Missionary Society; the missionaries themselves escaped. His Majesty's Consul at Foochow has advised the missionary societies to recall their members from outlying parts of the province.
In a report dated 30th January, His Majesty's Consul-General at Tsinan stated that the removal of the rolling stock of the Tientsin-Pukow Railway had been proceeding steadily since 17th January, 17 locomotives and 67 passenger and goods cars having been sent south, leaving 31 locomotives and 242 cars still to be removed. The British engineer considered that, owing to the necessity of effecting repairs, it would take at least a month to complete removal. The Japanese Embassy have informed me that freight traffic on the line was resumed on 12th February. This rolling stock has been immobilised since 3rd May last, but it would be misleading to say that it has been detained since that date,
as it was impossible to remove it until certain bridges had been repaired, and this work was not completed until the end of 1928.

SCHOONER, "I'M ALONE" (SINKING).

Mr. DAY: 12.
asked the Secretary of State for Foreign Affairs whether he has received the Report from the British Ambassador at Washington of the sinking of the British vessel, "I'm Alone," by an American ship; and can he give the House particulars?

Sir A. CHAMBERLAIN: Yes, Sir. The facts appear to be that in the early morning of March 20th last the schooner, "I'm Alone" which cleared from Belize, British Honduras, for Bermuda, encountered the United States revenue cutter, "Walcott," off the coast of Louisiana at a place which is alleged by the United States preventive authorities to be 500 miles off her course to Bermuda. The United States Government also allege that at the time when the "I'm Alone" was encountered by the "Walcott" she was within the limits prescribed by Article 2 of the Convention respecting the Regulation of the Liquor Traffic signed at Washington on 23rd January, 1924, but this is disputed. The master of the "I'm Alone" declined to obey the command of the officer in charge of the "Walcott" to heave to, and made off with the revenue vessel in pursuit. The chase continued until the morning of 22nd March, when the "I'm Alone" was sunk by gun-fire from the United States revenue cutter, "Dexter," which had joined in the chase some time earlier, the master of the "I'm Alone" still refusing to heave to. When the "I'm Alone" sank the master and crew were thrown into the sea, which at the time was running moderately high, but were able to reach the "Walcott" or the "Dexter," and were picked up by the crews of one or other of these vessels. The boatswain unhappily did not react to artificial respiration on board the "Walcott" and died.
The crew of the "I'm Alone" were taken to New Orleans and proceedings were initiated, but on 9th April these were discontinued, the charges against them being withdrawn.
On the same date the Canadian Minister at Washington, acting upon instructions from His Majesty's Government in Canada, made representations to the United States Government. His Majesty's Government in the United Kingdom had previously been notified by His Majesty's Government in Canada of their intentions, and His Majesty's Ambassador at Washington was authorised to inform the United States Secretary of State, after the delivery of the Canadian note, that they shared the views of His Majesty's Government in Canada, and desired to support the action taken by them.

Mr. DAY: Can the right hon. Gentleman say whether any claim for compensation has been lodged?

Sir A. CHAMBERLAIN: Not, I think, at present.

Major COLFOX: Can my right hon. Friend say whether the pursuit was continuous or not?

Sir A. CHAMBERLAIN: I would rather make no further statement, and, above all, offer no opinion of my own while the matter is still sub judice.

Mr. MACQUISTEN: Is it the case that all American liners have now themselves gone wet in defiance of the Prohibition Laws?

MERCANTILE MARINE.

LOSS OF STEAMSHIP "VESTRIS."

Sir BASIL PETO: 13.
asked the President of the Board of Trade whether he is now in a position to inform the House when the Board of Trade inquiry into the loss of the s.s. "Vestris" will be held; and what will be the composition of the full court?

Sir P. CUNLIFFE-LISTER: The inquiry into the circumstances attending the loss of the s.s. "Vestris" will be held in the Great Hall of the Institution of Civil Engineers, Great George Street, Westminster, and will commence at 11 a.m. on Monday next, the 22nd April. The inquiry will be presided over by Mr. Butler Aspinall; and he will be assisted by five assessors, two of whom will be shipmasters, one a naval officer, one a marine engineer and one a naval architect.

COLOURED SEAMEN (WHITE WOMEN).

Sir R. THOMAS: 17.
asked the Home Secretary whether he has now decided to take action as a result of the facts revealed some months ago in the report of the Chief Constable of Cardiff regarding the association of white women with Asiatic and coloured seamen in the dock district; and, if so, along what lines?

Sir V. HENDERSON: The problem is not a new one, and I do not think that any immediate and complete solution of it is possible. As my right hon. Friend indicated in reply to a question by the hon. and gallant Member for Cardiff, South (Captain A. Evans), on 28th January last, certain possibilities are being investigated; but I should prefer not to specify them at present.

Sir R. THOMAS: Cannot the hon. and gallant Gentleman give a reason why he will not specify the possibilities?

Sir V. HENDERSON: This is not a subject for discussion at Question Time.

Lieut.-Commander KENWORTHY: Is not the remedy for this to employ a greater proportion of British seamen in British ships?

Sir R. THOMAS: Is the hon. and gallant Gentleman not aware that this is a very serious matter, and does he not think that some reasonable reply should be given to a question of this kind?

Sir V. HENDERSON: The question as to whether the reply is reasonable is a matter of opinion.

Sir R. THOMAS: Is the hon. and gallant Gentleman aware that when he replies to questions he gives always the most evasive answers?

Viscountess ASTOR: Will my hon. and gallant Friend bear in mind, in dealing with this question, that women who have looked into it think that trained women police would be a great preventive?

STEAMSHIP "TUSCANIA" (SMALLPOX, CASES).

Lieut.-Colonel FREMANTLE (by Private Notice): asked the Minister of Health the numbers respectively of the crew of the s.s. "Tuscania" on her recent voyage from Bombay to Liverpool and of the passengers landed; whether all the passengers and crew are under observa-
tion; what number of cases of smallpox have occurred amongst them, what is the number and vaccination history of the cases that have died, and whether any cases of smallpox have been notified from contacts with such passengers and crew?

Sir K. WOOD: My hon. and gallant Friend will have seen the statement on this case issued by my Department and published in the newspapers on Saturday, and at present my right hon. Friend is not in a position to make any further statement.

Mr. JOHNSTON (by Private Notice): asked the Secretary of State for Scotland whether he is aware that a member of the crew of the s.s. "Tuscania" was discharged at Marseilles; whether subsequently a wireless message was received from Marseilles intimating that the man had died from smallpox; whether on arrival at Liverpool the other members of the crew were taken to hospital for smallpox; whether on arrival at Glasgow and before fumigation or disinfection of the ship an engineer along with 23 cases of chickens and seven barrels of ducks were transferred to the s.s. "Caledonia" which sailed for New York on the 7th April; whether the Transport Workers' Union informed the Ports' Medical Authorities of the; transfer of the engineer and the foodstuffs from the infected ship prior to the sailing of the "Caledonia"; why nothing was done to prohibit this proceeding; whether 40 bags of flour have since been transferred from the infected vessel to the s.s. "California," and whether he is in a position to assure the House that all proper steps are being taken to prevent a spread of the infection?

The SECRETARY of STATE for SCOTLAND (Sir John Gilmour): I have been unable, in the time available, to obtain information on the detailed matters referred to in this question. I am, however, making inquiries and will communicate the result to the hon. Member after these have been completed. I am satisfied that all reasonable steps are being taken by the competent authorities in Scotland to deal with the position and to protect the interests of the public.

Mr. JOHNSTON: Can the right hon. Gentleman say whether Dr. Macgregor,
in charge at the Health Department at Glasgow, has sent any wireless messages to the s.s. "Caledonia" and, if so, whether he can state the purport of those messages?

Sir J. GILMOUR: As I have already explained to the hon. Member, that is one of the points which I cannot answer.

Sir R. THOMAS: Is the right hon. Gentleman aware that the best medical supervision in the world is obtainable at the Liverpool docks?

ROYAL AIR FORCE (HOWDEN SHED).

Lieut.-Commander KENWORTHY: 15.
asked the Secretary of State for Air whether it is intended that the shed, etc., at Howden being used for the construction of one of the subsidised airships will be used in future as a civil aviation station for airships in the event of this type of aircraft proving successful?

The SECRETARY of STATE for AIR (Sir Samuel Hoare): I am not in a position to indicate as yet what the future policy in regard to the Howden shed will be.

AIR RAID BOMBS.

Mr. DAY: 16.
asked the Home Secretary whether he has any information of any bombs being discovered in the Metropolitan police area during the 12 months ended to the last convenient date that are believed to have been dropped from German air raiders during the War; and will he give particulars?

Sir V. HENDERSON: The answer is in the negative.

ANGLO-PERSIAN OIL COMPANY.

Mr. THURTLE: 19.
asked the Chancellor of the Exchequer the names of the present two Government nominees on the board of the Anglo-Persian Oil Company?

Mr. SAMUEL: The Government Directors are Sir G. L. Barstow, K.C.B., and Sir E. H. Packe, K.B.E.

Captain GARRO-JONES: In view of the fact that they must take no part in the commercial control of the company, what duties are they expected to perform?

Mr. SAMUEL: If the hon. and gallant Gentleman will put down a question I will give him an answer.

Mr. HARRIS: Will the hon. Gentleman state their qualifications for the posts?

Mr. THURTLE: 20.
asked the Chancellor of the Exchequer the number of directorships of subsidiary companies of the Anglo-Persian Oil Company held by each of the two Government nominees on the board of the Anglo-Persian Oil Company; and the amount of remuneration each receives in respect of these directorships of the subsidiary companies?

Mr. SAMUEL: Both Government directors are directors of the following nine subsidiary companies of the Anglo-Persian Oil Company:—Scottish Oils Limited; British Tanker Company, Limited; First Exploitation Company, Limited; National Oil Refineries Limited: British Petroleum Company, Limited; Tanker Insurance Company, Limited; D'Arcy Exploitation Company, Limited; Khaniquin Oil Company, Limited; and North Persian Oils Company, Limited. Sir Edward Packe is in addition, Director of the Britannic Estates Company, Limited and Anglo-Persian Oil Company (India), Limited. I understand that the aggregate remuneration of each Government Director for his services to the Anglo-Persian Oil Company and its subsidiaries approximates closely to £3,000 per annum.

Mr. THURTLE: Can the hon. Gentleman say whether these gentlemen have any particular qualifications which would suggest that they would be suitable for directorships of these oil companies?

Mr. SAMUEL: Yes, Sir. I think they are highly qualified and highly efficient men.

Commander OLIVER LOCKER-LAMPSON: Are they not worth a great deal more than they are getting?

UNEMPLOYMENT INSURANCE FUND.

Mr. KELLY: 22.
asked the Financial Secretary to the Treasury the amount loaned to the Unemployment Insurance Fund, with the amount owing by that fund at the end of March, 1929?

Mr. SAMUEL: Up to 31st March, 1929, £60,352,431 had been advanced to the Unemployment Fund from the Exchequer. Of this sum, £35,960,000 was still owing by the fund on 31st March.

Mr. KELLY: What is the rate of interest?

Mr. SAMUEL: I could not say, offhand.

TRANSPORT (RAILWAY BRIDGES, LONDON).

Sir H. BRITTAIN: 23.
asked the Minister of Transport the number of railway bridges in the London traffic area in need of reconstruction to meet presentday traffic conditions?

The MINISTER of TRANSPORT (Colonel Ashley): I regret that these figures are not at my disposal. A register of bridges in Great Britain is, however, in course of preparation with the object of obtaining this information as regards both railway and canal bridges, but the work entails an exhaustive survey which will necessarily take a considerable time to complete.

BROADCASTING (GENERAL ELECTION).

Sir H. BRITTAIN: 24.
asked the Prime Minister whether, by consultation between the political parties, any arrangements have been made for the use of the broadcasting service during the General Election by representatives of political parties?

Captain FRASER: 27.
asked the Prime Minister whether the political parties have come to an arrangement as to the broadcasting of political speeches before and during the election; and, if so, what is the arrangement?

The PRIME MINISTER (Mr. Baldwin): I would refer my hon. Friends to
the notices issued by the British Broadcasting Corporation on this subject which appeared in the Press on the 5th and 10th April.

Mr. SAKLATVALA: Will the Prime Minister explain why the Communist party is deliberately excluded?

Sir H. BRITTAIN: May I ask the Prime Minister to believe that his answer is entirely satisfactory?

The PRIME MINISTER: In answer to the hon. Member for Battersea North (Mr. Saklatvala), I would say that this is not a matter in which the Government have any concern at all.

Mr. SAKLATVALA: Is the Prime Minister aware that the Broadcasting Corporation receive Government help? What remedy does the right hon. Gentleman afford against any high-handed action by the Broadcasting Corporation?

The PRIME MINISTER: I would suggest consultation with the leader of the party most in sympathy with the hon. Member.

HOUSE OF LORDS.

Captain GARRO-JONES: 25.
asked the Prime Minister whether he can now make a statement in regard to the policy of the Government for the reform of the House of Lords?

The PRIME MINISTER: No, Sir.

Captain GARRO-JONES: In view of the fact that little time is left, can the right hon. Gentleman undertake to make a statement to the House before the Dissolution? If not, can he undertake that he will not make a statement in public before he makes a statement to the House?

The PRIME MINISTER: When the hon. Member's party announce their policy first in this House, I shall be pleased to consider the suggestion.

Captain GARRO-JONES: Is the Prime Minister aware that so far as this party's policy is relevant, it has been announced in the House. Moreover, is he aware that we have been asking him questions on this vital subject for four years and have not been able to get a reply?

BUSINESS OF THE HOUSE,

Ordered,
That the Proceedings of the Committee of Ways and Means be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House).—[The Prime Minister.]

FINANCIAL STATEMENT (1929–30).

Copy ordered,
of Statement of Revenue and Expenditure as laid before the House by Mr. Chancellor of the Exchequer when opening the Budget."—[Mr. Arthur Michael Samuel.]

Copy presented accordingly; to lie upon the Table, and to be printed.

COMPARISON OF EXPENDITURE, 1924 TO 1929.

Copy ordered,
of Statement of Expenditure on Consolidated Fund Services and Net Expenditure on Supply Services (excluding Post Office) for the years 1924 to 1929, inclusive, adjusted in respect of accounting changes introduced in 1928."—[Mr. Arthur Michael Samuel.]

Copy presented accordingly; to lie upon the Table, and to be printed.

Orders of the Day — WAYS AND MEANS.

Considered in Committee.

[Mr. JAMES HOPE in the Chair.]

Orders of the Day — FINANCIAL STATEMENT.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill): The financial year which has just closed resembles its predecessor in various ways. Again, the failure of beer was repaired by the harvest of death. Again, substantial supplementary charges were more than made good by savings from the current Estimates and, once again, the realised surplus exceeded both Estimates and expectations.

Orders of the Day — REVIEW OF PAST FIVE YEARS.

It is usual, in opening the Budget, to compare the current year with the last, but on this occasion, in presenting a fifth Budget, at the close of a Parliament, I feel entitled to look back over the whole period for which we have been responsible. It has been a chequered story. The difficulties have been more prominent than the good fortune. The immense industrial disaster of 1926 has cut a deep gash across the statistical record of our national life. I thought at one time, and I so informed the House of Commons three years ago, that the finances of the Parliament would have been completely ruined by a loss to the Exchequer, which, including the coal subsidy of 1926, was certainly not less than £80,000,000. However, on a review of the past five years, I must admit that matters have worked out a good deal better than I hoped or expected. [An HON. MEMBER: "Or deserved."] No one has more interest in things going well than the Government of the day and the Minister responsible for the finances of the country. In spite of the injury to every form of national life by the follies of 1926 we have realised a respectable and, as I shall show, a solid surplus in the year that has closed. The material prosperity of this country, whether judged by the condition of its finances, by the volume of its trade or by the saving and consuming power of its people, has maintained a steady advance. For more than two years now we have enjoyed a lucid interval without a
general strike or a period of general elections, or a general war. That is the longest lucid interval that I can remember since 1914. Two years' recuperation is quite a long time for this country to allow itself between its ordeals, and, naturally, after two years of peace and quiet there must be a sensible improvement in the general situation.

I will give the Committee a few facts and figures. During the present Parliament the savings of the smallest class of investors, measured by the Post Office Savings Bank, the National Savings Certificates, Building and Provident Societies, and other thrift agencies, have increased by £170,000,000. New purchases of Savings Certificates, which were £31,650,000 in 1926 and £36,000,000 in 1927, have risen under the chairmanship of my right hon. Friend Major-General Seely to £40,850,000 in 1928. The number of persons employed in the insured trades has gone up by 591,000. The cost of living, according to the latest figures, which I only received at the end of last week, has declined by 18 points at least, while money wages over the whole country are almost exactly at the level of 1924. There has been a notable decline in the consumption of alcoholic liquor, accompanied by a progressive diminution in drunkenness. The consumption of working-class indulgences has shown an increase generally, though it is naturally much more marked in the southern parts of the island. Motor bicycles, silk garments, popular amusements, excursions by train and char-a-banc, have all shown a moderate, steady increase, and this in spite of the shocking injuries we have inflicted upon ourselves in the course of the period I am reviewing. But the symptom upon which I dwell with more confidence than any other as indicating the general position of the masses of the people is the increased consumption of tea and sugar. In the palmy days before the great War, the British people consumed each year per head 6.55 lbs. of tea and 81 lbs. of sugar. Last year, after all that had happened at home and abroad, they consumed per head 9.15 lbs. of tea and 90 lbs. of sugar. That is the record consumption of these commodities. The breakfast table duties are the traditional Gladstonian indices of the condition of the wage-earning masses, particularly of the unorganised masses, and
especially of the poor. Under all the froth of our turbulent party fights and in spite of all our common faults and shortcomings, it is at any rate satisfactory to note this steady and marked improvement in such an important feature.

Coming now to the commercial sphere. The balance of trade has sensibly improved, and the power of this community to invest capital abroad, thus fostering our export trade, has risen from £86,000,000 in 1924 to £149,000,000 in 1928. New capital issues for home investment in 1928 show a growth of about £100,000,000 over those of 1924. Municipal and industrial issues in the United Kingdom have risen from £70,000,000 in 1924 to £180,000,000 in 1928. Bankers' deposits have risen by £140,000,000, or about 8 per cent. Five hundred million more letters were written and 700,000 more motor vehicles used last year than in 1924. To sum up, whatever may be the fortune of particular industries or particular localities, there is no doubt that we all dwell to-day in a more powerful, more wealthy, more securely founded, and more numerous community than five years ago. There is no doubt that we are steadily improving our own conditions, and that compared with most European countries we are maintaining our old pre-War level. Of course, our progress during these years has been relatively far outstripped by the United States of America, which gained great advantages in the War and has displayed a far higher stability of purpose ever since.

I almost hesitate to mention to the Committee the subject of public economy. We are assured on all sides that the only way to gain the approval of the modern electorate is to spend money as fast as possible and on an enormous scale. The two Opposition parties vie with one another in promises of vast expenditure; the only difference between them is that the Labour party would get the money by taxation and the Liberal party would get it by borrowing. A Surtax of 2s. in the £ levied on investment incomes in excess of £500 a year would, if nothing disappointing happened in the collection, produce £65,000,000 a year provided it was levied on the reserves and investment incomes of companies as well as on the investment incomes of individuals.
Such a sum would only be obtained at the cost of a very sharp setback to every index of national prosperity. But the right hon. Gentleman the Leader of the Opposition has already distributed the £65,000,000 at least four times over. The Surtax, originally proposed for the reduction of the National Debt, is now to pay for the free breakfast table, for the replacement of all the McKenna, silk, luxury, safeguarding and key industry duties, as well as for the £200,000,000 or £300,000,000 of the Socialist social programme. I must observe that in this field, at any rate, there will be disillusionment—and disillusionment in our own time.

The Liberal opposition would proceed to capture the great heart of the people by borrowing. The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) proposes to borrow £200,000,000, and to spend it on roads and telephones in order to cure unemployment. Borrowing, if your credit has been carefully looked after, is often feasible, and it is always an easy way of avoiding disagreeable) things like work and and self-denial. It saves a lot of trouble. Instead of having to earn the money and save the money, you just go and borrow. What a lucky thing that in this crisis of our fortunes such a brilliant idea should have struck the right hon. Gentleman! Spending money, borrowed or otherwise, while it lasts is always good fun. There must be many hon. Members who from their personal observation or even experience can confirm that view.

Accordingly, the right hon. Member for Carnarvon Boroughs is going to borrow £200,000,000 and to spend it upon paying the unemployed to make racing tracks for well-to-do motorists to make the ordinary pedestrian skip; and we are assured that the mere prospect of this has entirely revivified the Liberal party. At any rate, it has brought one notable recruit. Lord Rothermere, chief author of the anti-waste campaign, has enlisted under the Happy Warrior of Squandermania. The detailed methods of spending the money have not yet been fully thought out, but we are assured on the highest authority that; if only enough resource and energy are used there will be no difficulty in getting rid of the stuff. This is the policy which used to be stigmatised by the late Mr. Thomas Gibson Bowles as the policy
of buying a biscuit early in the morning and walking about all day looking for a dog to give it to. At any rate, after this, no one will ever accuse the right hon. Gentleman of cheap electioneering.

Orders of the Day — ECONOMY.

I am afraid that after these spacious figures, running into hundreds of millions, the Committee will be ill-inclined to follow with much interest the modest savings we have been able to effect in the course of last year and in the lifetime of this Parliament. Nevertheless, in presenting the public balance-sheet it is my duty to draw attention to them. Our greatest economy in this Parliament has been upon armaments. The Navy, the Army, the Air Force, including the Middle East, which was not included in the military Estimates for 1924, have yielded savings of over £7,500,000 compared with the year of the Labour Government. The Navy had a specially difficult task because the Labour Government, quite rightly in my opinion, laid down five cruisers, which cost Lord Chelmsford's Estimates only £1,500,000, but cost the Estimates of my right hon. Friend the present First Lord nearly £10,000,000. I certainly expected, and I stated so four years ago, a figure for Navy Estimates substantially larger than we have now, and I think that great credit is due to the First Lord of the Admiralty and to the Board of Admiralty for the way in which they have managed to provide for the heavy cost of an increase in the new construction vote, not only without appreciable addition to the Socialist Estimates, but, if you take the increase of the non-effective charges and the transference of the Fleet air arm from Air to Navy Votes into consideration, with an actual diminution of £1,750,000 a year. This represents five years of careful and resolute work which is naturally much against the grain to naval men. But I admire them for the persistency with which they have carried it out.

The Army has been administered by the Secretary of State for War with progressive and increasing frugality. Every single year he has effected further reductions. When he first went to the War Office, in 1921, the Estimates, in the dying momentum of the War, were
£80,000,000. When, at the beginning of this Parliament, he went there they were £45,000,000. They are now £40,500,000, and the later diminution has been achieved, not only without loss of efficiency, but in spite of the serious necessary new expenditure on what is called mechanisation.

It was, and I believe it still is, common ground that the Air Force should be expanded into some reasonable defensive relation with those of our Continental neighbours, and programmes were approved six years ago which would have carried the expense of the Air Force in the ordinary course to £21,000,000 this year. The actual expenditure is £16,000,000. It is mainly through the agency of the Air Force and the thrifty genius of Sir Hugh Trenchard that my right hon. Friend the Secretary of State for Air has been able to bring the cost of the Middle East, which before the Cairo Conference of 1921 was £44,500,000 a year, down to just over £500,000 a year at the present time, and to effect a reduction, within the lifetime of the present Parliament, of £4,250,000 a year. In all, the reductions made by the present Government under these four heads—that is, the three fighting services and the Middle East—aggregate over £7,500,000 a year. I hope the Committee will excuse me for mentioning such a trifle, in view of the megalomaniac projects of expenditure which we are told are now so popular.

I turn to the Civil Supply Services. The steady growth of expenditure on the Civil Supply Services existing in 1924, notably housing, health and education, has added £11,500,000 to the public burdens. Old Age Pensions, partly as a result of our legislation and partly by the automatic growth occurring as the result of previous legislation, have increased by £10,500,000. In addition, we are providing in the present year for several services which were not ill existence in 1924—Widows' Pensions, beet sugar, schemes for the training of transference of unemployed, additional expenditure on agriculture—amounting in all to £8,500,000, or a total increase of Civil Supply Expenditure from all these causes of £30,500,000. This increase has been partly offset by automatic reductions, chiefly in War pensions through the dying-off of War pensioners and the re-
marriage of War widows. This offset amounts to £18,500,000, leaving a net increase of £12,000,000. But I ask the Committee to note—and I ask them to give due credit to this achievement—that by savings elsewhere, year by year and month by month, effected in small sums over wide areas and prolonged periods, His Majesty's Government have been able to show, instead of an increase of £12,000,000 as compared with 1924, an actual decrease on Civil Supply of £5,500,000. It has been able to show that decrease for services which are appreciably larger, more comprehensive, more varied and rendered to a population which is greater by nearly 1,000,000 souls.
In the year just closed I have been able to repeat the salutary process which I started three years ago of a second scrutiny of the spending Departments after the Estimates have been approved by the Cabinet and by Parliament. I took no money in the last Budget for the extra troops in China. I have had to face £3,500,000 worth of Supplementary Estimates—acceleration of the freight relief, £1,000,000; extra Old Age Pensions, £559,000; transference and training of unemployed, £460,000; contribution to the Lord Mayor's Fund, £857,000, and that act of generosity towards the sufferers from Irish injuries on which the House resolved, £385,000, or a total of £3,600,000 odd. But, notwithstanding all this, the actual expenditure on Supply Services is less than the original Budget provision by £2,600,000, entirely through economies of over £6,000,000 effected during the year, by day by day administration, after the Estimates had been passed.

Before leaving this question of economy, may I say that, in my judgment, there is no room for large cuts in the social services. Large cuts in armaments are dependent upon international agreements which, I fear, will not be as easy to reach as we would all hope, and, even so, we are limited by the absolute requirements of the safety of this island and of the community of the British Empire. A process of continued refinement and reduction can and should and must go on, but we cannot break up our social services around which the life of the people has so largely been built. We cannot make any large reductions in
the Navy without falling below the one-Power standard, which, in my opinion, would be a fatal decision, or without jeopardising our food and trade routes. We cannot further reduce the police force which we call our Army without failing to retain the Cardwell system of linked battalions upon which depends the whole economy of the garrisons which we have to keep in India and elsewhere overseas. We cannot arrest the development of the Air Force without placing ourselves largely at the mercy of that very neighbour, for subservience towards whom we are repeatedly reproached, and whom the right hon. Gentleman the Member for Carnarvon Boroughs is never too busy to offend.

Orders of the Day — GOLD STANDAKD AND COST OF LIVING.

I will now, if the Committee will allow me, come to the question of the gold standard and the cost of living. Everyone knows, or pretends to know, the arguments for and against the gold standard. No one has ever denied that it carried with it privations as well as rewards. My hope and faith is that the privations are minor and temporary and that the rewards will be major and permanent. Everyone knows, for instance, that the gold standard renders inflation impossible and that its introduction deprives the exporting power of a country of the hectic stimulus of a collapsed exchange. Everyone knows that a fall in prices, although it may bring you into truer relation with the outside world and although it is in the long run an advantage of the highest kind, is, while it is taking place, disheartening to the producer at home. Everyone knows that our present policy of paying our debts and maintaining a sound currency implies inevitably high taxation, national sacrifices, and some suffering.

Miss WILKINSON: Class sacrifices, not national sacrifices.

Mr. CHURCHILL: There is among us—I do not know whether the hon. Lady is a member of it or not—a small but highly intellectual school of thought which reaches its fullest expression in Russia, but also flourishes among some of our nearest neighbours, and which proclaims openly that it is much better for a nation to go through the bankruptcy court and start business again—
as most of the great Continental belligerents have done in one form or another—and either to repudiate its debts and start again or pay as much in the £ as it finds convenient by writing its currency down to the necessary figure. Happily, we are not called upon to argue about the ethics of such a course because, in any case, it would not be in the interests of Great Britain, which is still the greatest of all creditor countries. The population of this island is maintained by international trade, and anything that makes the purchase of the raw materials and the foodstuffs which we need more costly or more difficult is a direct menace to our livelihood. From this point of view, the producing industries, as well as the entrepot trade, have derived a lasting benefit from the resumption of the gold standard. But this is not all. Nearly one-quarter of our population depends on world-wide operations of credit and commerce for which the stability of sterling is absolutely essential.
The income which we derive each year from commissions and services rendered to foreign countries is over £65,000,000, and, in addition, we have a steady revenue from foreign investments of close on £300,000,000 a year, 90 per cent. of which is expressed in sterling. Upon this great influx there is levied, as a rule, the highest rates of taxation. In this way we are helped to maintain our social services at a level incomparably higher than that of any European country, or indeed of any country. These resources from overseas constitute the keystone, in time of peace, of our economic position, but they depend upon the stability and integrity with which our experienced democracy has hitherto been prepared, under every stress and strain, to maintain the strictest principles of public finance and public faith. Everyone is tempted from time to time by seductive dodges, and everyone from time to time concedes something from the purity of orthodox opinion, but no British Government has yet dared to undermine the hard rock of British financial integrity; and with the mighty economic structure of the United States towering up on our western flank, if ever there was a time when such a step would be disastrous it would be
now. Better hard times and a continuing nation than lush, lavish indulgence and irrevocable decline.
We may console ourselves among present discontents by observing that London, in spite of the immense sacrifices made by Great Britain in the War, has regained effectually its solid international pre-eminence in the world, by observing that we are still the greatest international market, that we are able to maintain money rates which are lower than those prevailing in New York, and that the bill of exchange on London, which after the War was seriously menaced, has, in the last few years, regained its time-honoured position as the favourite international instrument and token of commerce.
But I will own that an equally great attraction for me, in the pursuance of this policy, has been that decline in the cost of living which was definitely promised as the result of our allegiance to sound money. I spoke earlier about the increased consumption of tea and sugar. Everyone knows the argument in favour of a free breakfast table, but what is the burden of these remaining taxes on tea and sugar compared to the relief afforded to the consuming public by a decline of 18 points in the cost of living? The identifiable increase in the purchasing power of the wages of insured wage and salary earners alone is equivalent to a remission of indirect taxation of £160,000,000 a year. This takes no account of the proportionate advantages reaped by the enormous number of persons, including the poorest in our midst, unorganised and uncatalogued, from the improvement in the purchasing power of the humble incomes upon which they depend.

Orders of the Day — NATIONAL DEBT.

I now come, having dealt with economy and the cost of living, to the Debt operations of the present Parliament. [An HON. MEMBER: "What about wages?"] Money wages are equal to those of 1924, taken over the country as a whole. The nominal dead weight Debt has fallen from £7,598,000,000 to £7,501,000,000, or by a total of £97,000,000. But such nominal figures, as I have several times explained, are misleading as a test of the progress made. They fail, for instance, to discriminate between such totally different liabilities as a £100 bond payable next week and a nominal £100 of the old
Consols, which need never be repaid, except at the option of the Government, and will in fact never be repaid until some remote date when the interest rates are in the neighbourhood of 2½ per cent. But on a direct actuarial valuation, on the basis of the 4¾ per cent. tables—that is to say, taking every separate stock we have issued and calculating its own actuarial value—on this basis, which is the nearest basis we can get to a true scientific valuation, the obligations imposed on the State by the existing debt contracts have fallen in the last four years by £175,000,000. But this figure of £175,000,000 takes full account of all unpaid Savings Certificates interest. If it were open to me to follow the example of every previous Administration in ignoring that unpaid interest, the reduction in the four years would not be £175,000,000, but over £200,000,000. That is not as much as we had hoped, and it is not as much as eminent Liberal economists, or ex-economists, as I am afraid I must say, like the right hon. Member for West Swansea (Mr. Runciman), have often told us it ought to be, but it represents an immense exertion and sacrifice by the taxpayer and the Exchequer. At any rate, the right hon. Member for Carnarvon Boroughs ought not to cavil at it, because it is almost exactly the sum of £200,000,000 which, in trying to win the General Election, he now proposes to borrow and spend in a couple of years. At least we may console ourselves by feeling that the thrift of a Parliament has provided the raw material for another Yellow Book. We have painfully and toilsomely gathered together our meagre savings, and they are now to be butchered to make a showman's holiday.

4.0 p.m.

During this Parliament we have been passing through a period of enormous maturities in respect of the medium term debt consisting principally of National War Bonds, and no less than £1,105,000,000 of debt has fallen due for payment, over and above the ordinary very large transactions upon the Floating Debt. These maturities have come upon us at obligatory moments even in the worst period of 1926, as I said at the time, like Atlantic waves sweeping the deck of a labouring ship, and I have been forced to repay or convert over £1,160,000,000 in four years, that is to
say, at an average of £23,000,000 a month during the whole lifetime of the Government, an experience unprecedented. But the greater part of the task is now over. These comparatively short-term bonds have now, been largely replaced by longterm debts, and their volume has shrunk from 17 per cent. to 9 per cent. of our total liabilities. An easier period lies ahead. The total Debt falling due in the next four years, which the Government is under compulsion to redeem, amounts to no more than £321,000,000, or much less than one-third of that we have had to deal with in an equal period, and the removal of this recurrent preoccupation and disturbance undoubtedly simplifies the prospects of dealing with the conversion of the 5 per cent. War Loan, which still remains the greatest and most fruitful financial operation likely to be open to the British people, With one single exception every conversion for which I have been fully responsible has effected a saving to the taxpayer, and the total saving from Conversions has been £1,500,000 a year. The one exception was the £62,000,000 of the 3½ per cent. War Loan. This was issued at the beginning of the War at the low rates of interest then prevailing. It was issued under conditions which made it redeemable at par at a fixed date, which fell in my tenure of office, and, of course, the money had to be reborrowed at the post-War rates. That involved us in an annual addition of £700,000 to the charge for the Debt. But for that, the reduction by conversions in the annual public burdens would not have been £1,500,000, but £2,250,000. In the meanwhile—[Interruption]—in spite of all the help which we were given in 1926—in the meantime, by the constant operation of the Sinking Fund, the interest upon the Debt has been reduced by £9,500,000 a year, and with the saving by conversion, the total reduction in the annual cost of our permanent borrowing is £11,000,000 a year.

Why then, it will be asked, has the total snnual charge for the service of the Debt increased? There are two reasons. First of all, the accumulated interest on the Savings Certificates encashed, which, in 1924, was only £7,000,000, was in 1923 nearly £18,000,000. If, throughout, the British Government had faced
their obligations on these Certificates as we are now doing, there would be no such difference in the two periods. The increase in the charge on account of Savings Certificates has accounted for £11,000,000, and thus the real reduction effected on the other permanent parts of the Debt Charge has been veiled. The second cause is the Treasury Bill rate. In 1928 that rate, contrary to expectations at the beginning of the year, proved high, and the cost of the floating Debt was £5,000,000 higher than in 1924, although the Debt itself was somewhat smaller. The Treasury Bill rates in the last seven or eight years have fluctuated to such an extent as might easily make a difference of £20,000,000 to the Budget. The Treasury Bill variations are in their nature temporary, and neither the Treasury Bill rate nor the fact that we have faced our obligations on the Savings Certificates should be allowed to obscure the solid and irrefutable fact that the actuarial value of the Debt has been reduced by £175,000,000, and the permanent annual cost by £11,000,000. There is, therefore, no ground for supposing that the exertions of the taxpayer in maintaining the Sinking Fund have not yielded a full proportionate diminution both in lower interest charges and in regard to the aggregate Debt liability.

Orders of the Day — SURPLUS, 1928–9.

I come to the surplus of 1928. It would seem almost that I ought to apologise to both the Oppositions for the size of that realised surplus. They seem to show almost as little enthusiasm—it is only human nature—when the surplus goes up as they do when the unemployment figures go down. The right hon. Member for Colne Valley (Mr. Snowden) has rebuked me, in his excursions in the Press, for having raided the Sinking Fund. I have not raided the Sinking Fund. I have only carried out the law which Parliament enacted last year. People cannot pretend that they do not understand legislation. If they do not, they ought at this moment to conceal the fact. I have only carried out the law which Parliament passed last year. I have simply fulfilled the statutory requirements of a fixed annual Debt charge of £355,000,000. This was specially augmented last year by £14,000,000 in consequence of the windfall from the
currency note account and the total immense sum of £369,000,000 was, as prescribed by Parliament, devoted to the service and extinction of debt. At any rate, the right hon. Member opposite, my predecessor, is in no position to criticise me. I provided last year £57,500,000 for the Sinking Fund out of the fixed Debt charge as against £45,000,000 which he thought necessary when he framed his Budget, and I provided £18,000,000 for the Savings Certificates, as against £7,000,000 which was all he provided—and he had not had a General Strike. The fact is that on these two heads—the extinction of Debt and the prevention of future Debt—I have provided £75,500,000 as against the £52,000,000 which he thought, and which, at the time, I thought proper, or £23,500,000 more money was found last year than he provided. To be quite fair, I ought to make allowance for the concealed Sinking Funds which I mentioned to the House last year, and take off £5,500,000—I am glad the hon. Member for West Leicester (Mr. Pethick-Lawrence) is approving of this—and making allowance for this £5,500,000, I have in fact provided for the extinction of Debt and non-incurring of Debt, £18,000,000 more than the right hon. Gentleman.

I am not using that argument in order to plume or preen myself over the right hon. Gentleman. I am only doing it to protect myself against his future unkind-ness. I am very glad I persuaded Parliament to assent to this arrangement, and I expect anybody who occupies the position I now hold—[An HON. MEMBER: "Not for very long "]—we are to have further information about that—will be very glad that the fixed Debt charge has been established. What could be more absurd than to mix up Supply expenditure, which depends upon the decision of the Government of the day and the House of Commons, with the fluctuations in the world money market? We were all agreed last year that our accounts ought to be simplified so as to-separate the healthy growth of revenue on the Post Office and Road Fund from the ordinary Supply expenditure, and to isolate the expenditure which represents the cost of national administration, and the accounts are now presented in that form. But how much more absurd would it be that any Chancellor of the Exchequer should
labour for the best part of the year to claw back £5,000,000 or £6,000,000 from the spending departments, and that the Treasury should fight week after week over £100,000, £50,000 or £10,000 of expenditure, and then when this £5,000,000 or £6,000,000 has been saved, as the result of this harassing and unpopular process, the whole fruits of this conflict should be whisked away because the Bank Rate has had to be put up or because more Savings Certificates have been encashed than was foreseen? I do not hesitate to say that if the House of Commons wishes to keep strict control over expenditure and be continually in a position to curb and check the tendencies to profusion of Governments and bureaucracies, the vital step to take is to isolate controllable expenditure from other elements in the Budget, to set it, as it were, on a pedestal or, if you like, in a pillory, where it is nakedly exposed to the public gaze.

That is what we have tried to do, and that is what we have done in fact. On the one hand, the new system of accounting thrusts away from the ordinary expenses of Government the healthy normal growth of reproductive departments, and, on the other hand, we wall off into a separate water-tight compartment all the fluctuations of finance to which we are subjected by the fact that we remain the central money market of the world, and we think it well worth our while to exert ourselves so to remain. Thus there is left for the criticism, censure or approval of the House of Commons, the direct cost of managing and guarding the State. Instead of all these quite different things being jumbled together and a muddled total presented, I have stripped onerous and controllable expenditure of every cover, so that henceforward it can be accurately and stringently examined and measured by the House of Commons. I do not think that this system will be altered in the future. It may be too much to hope that the £355,000,000 fixed charge will be maintained in force for the next 50 years, in which case the Debt would be extinguished, but it certainly ought to be maintained for longer than anyone in this present Assembly lives-upon the surface of the globe. But, however that may be, I claim to have placed future Chancellors of the Exchequer in a position where the extravagance or economy of the Governments they represent can be clearly and justly judged.

Orders of the Day — FORECAST FOR 1929.

I come now to the expenditure for 1929. I estimate the Consolidated Fund Services as follow:



£


Debt interest and Management
304,600,000


Payment to Local Taxation Account
15,000,000


Payment to Northern Ireland Exchequer
5,400,000


Miscellaneous Consolidated Fund Services (including new Agricultural Mortgage Scheme, £500,000; expenses of returning officers at General Election, £420,000)
3,500,000


Total
£328,500,000


The cost of the Supply Ser vices has already been stated at
347,504,000


Total expenditure
£676,004,000


(which compares with £632,201,000 actual out turn for 1928).



Adding rating relief
15,560,000


and Compulsory Sinking Funds
50,400,000


Giving (apart from the self-balancing expenditure of the Post Office and Road Fund) a Total of
£741,964,000

I will now forecast, in the light of 1928, the revenue of 1929. Last year Customs and Excise showed a deficit of £8,400,000. That is almost entirely accounted for by beer alone, which showed a shortfall from the estimate of £7,350,000. That is an Exchequer embarrassment, but it is not a national misfortune. The depression of the basic industries and the impoverishment of a large part of the wage-earning classes through the troubles of 1926 are a partial explanation, but in the main there has been a steady decline in the consumption of alcoholic liquor throughout the island. That is due to a change in national habits and to the growth of alternative attractions. After making full allowance for all the improvements in trade conditions which may be expected, I cannot estimate for more than £79,000,000 of beer revenue in 1929. The move-
ment towards greater temperance appears general among all classes, for the wine revenue fell short by £650,000; and, if spirits showed a quite unexpected increase of £300,000 upon the Estimate, that is entirely due to the exceptionally cold weather through which we have passed. In the whole field of this revenue, even prosperity will bring no marked expansion. I think we may all dwell with some complacency upon the results which regulated freedom, corrected by high taxation, have shown compared with those which have followed—or perhaps I ought to say which have flowed—elsewhere from prohibition, tempered by bootlegging.

The sugar remission of last year cost £1,000,000 more than I had expected. That is due to the very rapid shrinkage in imports of foreign refined sugar. Whereas in the three years ending in 1927 the British refining industry had fallen to a 50 per cent. share of the home market, it had already risen to 70 per cent. in 1928 and is still expanding. Contrary to the predictions of the right hon. Gentleman the Member for Colne Valley, who was very lavish in his predictions and assertions last year, the farthing remission reached the consumer, and so far from being withdrawn after a few months, it was reinforced by another farthing, which was due to the abundance of sugar supplies throughout the world, and to-day the consumer is paying a halfpenny less on an average for granulated sugar than a year ago. There is very little to complain of in that. The Betting Duty yielded £2,250,000 in 1928 owing to the higher rates being in force during the flat racing season. The full yield of this Duty at the new rates established on 1st October, 1928, would be £1,400,000. The new Oil Duty yielded £800,000 above the £12,200,000 which was my final estimate after the exclusion of kerosene. This duty has proved extremely easy to collect, and it has not checked the rapidly increasing use of petrol as much as we thought it prudent to allow for. After considering all that has taken place, I put the Customs for 1929 at £126,000,000, and Excise at £131,950,000, a total of £257,950,000. I
have put the Exchequer share of the Motor Vehicle Duties at £4,700,000.

I turn to Inland Revenue. If the Committee will consult the Blue Paper, they will find, in Table 2, details of the Inland Revenue in the year now closed. Income Tax exceeded the Estimate by as much as £4,700,000. This year, we have to face the increased cost of the children's allowances, but even taking that into consideration, I look forward to a receipt, in 1929, of £239,500,000 from Income Tax. The Death Duties yielded the record figure of £80,500,000, showing £8,500,000 above the Estimate, and £3,000,000 above the high yield of 1927. This duty has been substantially underestimated for the last two years, and I feel justified in taking a definitely more favourable view of its prospects than before. Therefore, I put the Death Duties for 1929 at £81,000,000, an increase of £500,000 above the record figure of the present year. Stamps, through the continuing activity of the Stock Exchange and the flotation of new companies, yielded in 1928 £2,000,000 more than the Estimate, and £3,000,000 above 1927.

Mr. WALLHEAD: What about 1926?

Mr. CHURCHILL: The hon. Member seems to feel very acutely his responsibility for 1926. I estimate for a further growth of £1,000,000 in the current year, making the figure for Stamps £31,000,000. Excess Profits Duty yielded £850,000, notwithstanding repayments of £4,500,000. The Corporation Profits Tax also produced £850,000. I see no reason why these two moribund duties should not repeat in 1929 the yield of £1,700,000 which they made in the current year. The one laggard in the Inland Revenue sphere is the Super-tax, which has fallen short of expectations by £3,800,000. That is partly due to the fact that the acceleration of collection, which was in progress two years ago, has reached the limit. Nevertheless, it is natural to suppose that the Super-tax will reflect the general upward movement of the Income Tax and Death Duties, and my estimate this year is £58,000,000, which is nearly £2,000,000 above the yield of 1928, although substantially below the estimate of that year. It may be for convenience if I just read the forecast for 1929:



£


Income Tax
239,500,000


Super-tax
58,000,000


Estate Duties
81,000,000


Stamps
31,000,000


Excess Profits Duty and Corporation Profits Tax
1,700,000


Land Tax
800,000


Total Inland Revenue
£412,000,000





£


This, added to the Customsand Excise
257,950,000


and to the Exchequer shareof the Motor Vehicle Duties
4,700,000


makes the total receiptsfrom taxes
674,650,000


I turn now to the Non-tax revenue. The Committee will see, as the Blue Paper shows, that Non-tax revenue differed but slightly in 1928 from the estimate. It produced £93,966,000, against an estimate of £90,848,000. This surplus was almost entirely due to the Miscellaneous Special Receipts, which benefited by larger Reparation payments than I had allowed for, and by certain surpluses from the disposal of stores and the winding up of war agreements. For 1929, I estimate that the



£


Post Office net receipts will be
8,990,000


Crown lands will bring in
1,250,000


Receipts from Sundry Loans
30,550,000


Miscellaneous Ordinary Receipts
12,500,000


and Miscellaneous Special Receipts
26,000,000


a total Non-tax revenue of
79,290,000


being a reduction of nearly £15,000,000 from the figure of last year. This is due to the fact that we have this year no windfall of £13,000,000 from the Currency Note Reserve. Adding together the Tax and Non-tax revenue, and we get, apart from the self-balancing revenue and expenditure of the Post Office and the Road Fund, a total revenue for 1929 of £753,940,000. Thus there emerges, on the basis of existing taxation, a prospective surplus of £11,976,000. We have also in hand in the Suspensory Fund, our nest egg of £22,633,000.
I place these two surpluses, so to speak, upon the mantelpiece, where they can be admired or deplored according to party
inclination. Naturally, I am very pleased that the realised surplus should have exceeded, by £8,500,000, the forecast figures which I gave Parliament last year. But the revenue upon which the prospective surplus of 1929 is based has a special charm and virtue of its own. This year there are no adventitious aids and no windfalls of any consequence. We have passed through that period of fortunate but lucky expedients. We stand once more on the basis of permanent and continuing revenue. Moribund taxes have passed out of existence; revenue has become independent of temporary aids, or raids if you like to call them so; and I can present a balanced Budget with a reasonable prospect of a surplus upon the basis of the revenues which will live and grow.

Orders of the Day — REVIEW OF REVENUE.

At this point, I shall indulge myself once more in brief retrospect. Let the Committee remember the formidable subtractions from the revenue I have had to face. The remissions of revenue made by the light hon. Gentleman the Member for Colne Valley cost £13,500,000 more in a full year than in the year in which they were made. The special receipts from war stores have dropped by £11,500,000 since his day. The revenue from beer and spirits has fallen during my tenure by £10,500,000 a year. I have remitted £41,000,000 of Income Tax, and £4,000,000 upon sugar. Thus the total adverse tide which I had to face has been over £80,000,000 a year; and beyond this the coal stoppage cost the Exchequer, £80,000,000, spread over four years. In order to avoid the reimposition of severe taxation, I have brought into the revenue of these difficult years £19,000,000 from the Road Fund, £10,000,000 from the brewers' credit, £17,000,000 from the earlier collection of Schedule A, £14,000,000 from the Currency Note Account and unclaimed dividends, £60,000,000 in all. But these non-recurrent receipts are substantially less than the losses of the coal stoppage. [Interruption.] I do not want to use a controversial term. We have always agreed to call it the coal stoppage.

There still remained a permanent gap in revenue of over £80,000,000. All this had to be filled. On the other hand, we had the debt settlements and we have the working of the Dawes plan, for which
matter the right hon. Gentleman the Leader of the Opposition deserves all due and lasting credit. These have together secured to us increased receipts of over £23,000,000 a year, that is actual receipts of £32,000,000 or £33,000,000. There has been an increase in the Post Office surplus of £4,500,000. The General Exchequer share of the Motor Vehicle Duties is £4,500,000. The general growth of the yield of taxation has been £38,000,000. Lastly, in the place of the £45,000,000 of remitted taxation, we have increased the old taxes upon wines, tobacco and matches by some £6,000,000; and have devised new taxes upon luxuries like silk and artificial silk, the McKenna duties, duties on tyres, and in addition there are various safeguarding duties. Together these yield over £13,000,000 a year. Thus the new receipts of the Parliament aggregate £89,000,000, and more than fill the formidable gap I have described. I thought it would interest the House to realise, what changes, in fact, had actually taken place in the character of our taxation.

Orders of the Day — NEW IMPORT DUTIES.

Of the group of new import duties, which together yield a revenue of £13,000,000, it is certainly true to say that they are far less burdensome to industry and to trade than the income tax which would be required to replace them. To pretend that they are a burden on the wage-earning classes is pure nonsense. To treat them as if they were on the same footing as sugar, or even on the same footing as beer, tobacco and popular entertainments, is also absurd. Foreign motor cars or motor tyres, foreign pianos, silk garments, or even betting, are not forms of expenditure which compare, at any rate, with tea and sugar as essentials in the cottage budget.

No doubt we shall very soon be arguing on public platforms about the effects of the McKenna, Key Industries and Safeguarding Duties, and certainly that is a contest about which we feel no anxiety. But there are some duties which are not the result of any Committee or any general statutory enactment, but for which I personally am responsible as Chancellor of the Exchequer, and about which I should like to say a word. I take first silk. We
have had four years of the Silk Duties. Everyone can remember—if people nowadays remember anything—the long Parliamentary controversy which marked the passage of those duties. According to the right hon. Gentleman the Member for Carnarvon Boroughs I was to be hanged in a silken halter. [An HON MEMBER: "Wait and see!"] I am quite ready to wait and see. At any rate, it will be a cheaper halter. Let us see what has happened. The import of foreign artificial silk yarn has shrunk to a quarter; the British export has increased by 50 per cent.; home production has risen from 26,000,000 pounds to 51,000,000 pounds; 21 new factories have been erected in this country, some of them by foreign firms.' The insured persons employed in the silk and artificial silk industry have risen from 46,500 when the duties were passed to over 70,000 in 1928. The home price of artificial silk yarn has fallen by 25 per cent., and the quantity available for home consumption has increased by 50 per cent. And as a final result we have an assured revenue of over £6,000,000 a year. It requires a very pedantic purist to frame an indictment against such a duty. When the right hon. Gentleman the Member for Colne Valley has a little leisure, perhaps he will re-read the speeches he delivered against the Silk Duties during their passage, and will compare the assertions and the prophecies of which he is always so free with the facts and results as we know them today.

Very much the same story has revealed itself in respect of the protective or quasi-protective and revenue duty imposed upon foreign motor tyres. Six foreign factories have been established in this country, and increased employment has resulted, the export of British tyres has been fully maintained, the import has been diminished by more than a half, and the price of tyres has fallen 15 per cent. since April, 1927.

Mr. W. THORNE: Due to the fall in rubber.

Mr. CHURCHILL: If such results were produced on any scientific question by laboratory experiments no one would say they were decisive, but no sensible or truth-seeking investigator would deny their profound significance and importance.

Orders of the Day — BETTING DUTY

However, there is one of the new taxes for which I am responsible which has been a failure, which, indeed, has been a fiasco, and which obviously has caused more trouble than it is worth. I mean, of course, the duty on betting. Here was a project which had behind it a greater backing of public opinion, so far as the newspaper press expresses public opinion, than any other project of taxation of which I have ever heard. Newspapers as widely separated in view as the "Morning Post," the "Star," the "Spectator" and the "Church Times" ardently advocated the duty on betting, and many of those who had studied the subject with great attention thought a revenue of £6,000,000 or £7,000,000 a year, or even more, could be obtained from the taxation of this highly-luxurious dissipation. In practice, however, the duty has failed. The volatile and elusive character of the betting population, the precarious conditions in which they disport themselves, have proved incapable of bearing the weight even of the repeatedly reduced burdens we have tried to place upon them. It has become plain that the collection of this duty in this shape has been vitiated because it has not worked fairly. It is being paid exclusively by the honest bookmaker—who has been unable to avoid it. The very fact that he has paid the tax has placed him at an invidious disadvantage compared with more slippery and unsubstantial rivals. I shall say with the great Burke,
If I cannot have reform without injustice, I will not have reform.

I must admit that in considering this question I have also been influenced by a sense of obligation towards the Labour party, particularly towards the Leader of the Opposition. It is scarcely a year ago since the right hon. Gentleman told the country that His Majesty's Government, in deriving advantage from the duty upon betting, had become a parasite upon damnation. Scarcely a month ago the right hon. Gentleman, seduced by the spectacle of 100 bookmakers' motor cars at the Battersea election, showed himself only too ready to become a parasite upon damnation. [An HON. MEMBER: "It damned your candidate!"] It is in the common interest that we cannot afford to have the ideals of great parties debased in this manner. We must not lead
the weaker brethren into temptation. We must not expose a young, new, callow, half-fledged organisation to the seductions to which, in their immature state, they will infallibly succumb, and it is out of consideration largely for them, and for their reputation, that I have decided that the turnover duty upon betting should be immediately repealed. [An HON. MEMBER: "How about the motor cars now?"] I shall, however, continue to levy the personal licence duty of £10 upon all bookmakers, and, in addition, a licence duty of £40 a year upon every telephone installed in a bookmaker's office. The yield of these licence duties is estimated at £500,000 a year. We have as a monument of the betting tax, thanks to the zeal of the hon. and gallant Member for Abingdon (Major Glyn), the healthy machinery of the Totalisator, and upon this will be imposed a tax of one-half per cent. of the takings, which I have been led to believe is a fair equivalent to the licence duties upon bookmakers. The cost of these changes will be £850,000 in the current year and £900,000 in a full year.

It will be convenient for me at this point to deal with several minor but not necessarily uncontroversial topics. I have only one new tax to impose this year, and it is a very small one. I have been told that the fact that the rating relief, as given to brewers, distillers and tobacco manufacturers, is capable of being used by people of unscrupulous character and low mentality—such as are certainly not present in this House—as a means of prejudicing the scheme for giving rating relief to productive industry. Here, again, it is our duty to help our weaker brethren, and not to place a stumbling block in their path. Luckily, there is a convenient method which does not mar in any way the general symmetry of our rating reform scheme or the principle on which it is based. Manufacturers' licence duties have now long been levied, though at very low rates, upon brewers, distillers and tobacco manufacturers. I propose to raise those duties so as to take away from these industries the equivalent of the relief they will obtain under the de-rating scheme. There is not the slightest reflection or stigma upon those industries; on the contrary, some of their leading representatives have publicly stated that they do
not wish to benefit by the de-rating proposals, and it is very much to their credit that they have made that statement. The date of the imposition of these increased duties will be arranged, as the Scotch would say, "timeously" with the currency of the relief, and therefore these three industries will neither gain nor lose by our proceedings. The relief they would obtain in the normal working of the de-rating scheme is now estimated at £480,000; and the manufacturers' licence duties will be raised as described in detail in the White Paper, so as to produce a new revenue of like amount.

Orders of the Day — LIQUOR LICENCE DUTIES.

I now pass to a more amiable concession. For many years it has been contended that the Liquor Licence Duties which were imposed in 1910 stand at too high a level in view of the curtailment of the hours of sale. I stated in last year's Finance Bill Debates that this contention was justified so far as on-licences are concerned. I had not then the means at my disposal to remedy the grievance, but I now propose to reduce the licence duties payable by on-retailers by 25 per cent. This concession will take effect on the 1st October next, and will cost £950,000 in 1929–30 and £970,000 in a full year. At the same time, I propose to meet a demand, which has been frequently urged in Parliament for the convenience of the public in general, and to allow such off licence holders in England and Wales as hold a Justices' Licence and only if they hold a Justices' Licence, to sell single half bottles, but not quarter bottles, of spirits.

Orders of the Day — HARBOUR DUES.

Perhaps I had better dispose at this point of some other modest matters. I have made a provision of about £30,000 a year for reducing Harbour dues in certain cases where they press unduly upon fishermen, especially upon those engaged in the herring fisheries in Scotland and for assisting in the discovery of deep sea fishing grounds or in other ways. In addition certain debts to the Exchequer which weigh upon these fishing harbours and prevent them making full use of the rating relief will be eased either by remission or suspension. Fuller statements on this subject will be made if de-
sired by the Secretary of State for Scotland and the Minister of Agriculture.

There are one or two minor alterations affecting the Stamp Duties on amalgamations and in connection with the motor vehicle duties which will have a small effect on the finances of the year. These will be found set out in the White Paper.

Orders of the Day — RURAL TELEPHONES.

Last, but not least, it is proposed to afford to the public, especially in rural districts, certain improved telephone facilities. At present there is an extra charge of £1 a year for each furlong for telephone lines laid more than one-and-a-half miles from the terminal. By increasing the radius to two miles there will be comparatively few points in the more populous regions of this island which will be beyond the reach of the telephone service at ordinary rates. The immediate cost of this concession is £90,000 a year.

Secondly, and in addition, there are about 6,000 post offices—by far the greater part of them in villages—and 1,600 rural railway stations which have at the present time neither telegraph nor telephone facilities. It seems to the Government most desirable that this closer and wider linking up of our country districts with the centres from which they purchase and with one another should be fostered even though in many cases it cannot be justified on a strictly profit-making basis. Accordingly it has been arranged that at least five-sixths of these 6,000 post offices and 1,600 railway stations shall be equipped, for the most part during the next six months, with call boxes at ordinary rates. The remaining one-sixth which constitutes the most unprofitable investment must be left over for the present time. The cost of this will amount to £1,750,000 in the shape of capital expenditure under the borrowing powers of the Post Office. These concessions are no doubt small items—I almost blush to name them—but they fit harmoniously into the general scheme of the Government for fostering basic production.

Precise details of all these matters will be found in the White Paper. The various adjustments which I have mentioned make their inroad upon the surplus. The Betting Duty relief costs £850,000, the Publicans' Licence
Duty relief costs £950,000 and the various minor concessions cost the revenue £110,000. On the other hand the increase in the manufacturers licence duties on beer, spirits, and tobacco will be £480,000, leaving a net diminution of the prospective surplus of £1,430,000. Subtracting this from £11,976,000 leaves us still in possession of a surplus of £10,546,000.

Orders of the Day — DISPOSAL OF SURPLUS.

What shall we do with it? Let us, first of all, by way of preliminary digression, address ourselves to the burning question of whether national prosperity can be restored or enhanced by the Government borrowing money and spending it on making more work. The orthodox Treasury view, and after all British finance has long been regarded as a model to many countries, is that when the Government borrow in the money market it becomes a new competitor with industry and engrosses to itself resources which would otherwise have been employed by private enterprise, and in the process it raises the rent of money to all who have need of it. This orthodox view holds, therefore, that a special, even perhaps a double, responsibility rests upon the State when it decides to enter the money market as a rival to the ordinary life and trade of the country. The onus is laid upon the Government to prove either that the need is paramount as in the case of national safety being in danger; or that the work is necessary, and would not be otherwise undertaken; or that the spending of the money by the Government would produce more beneficial results than if it had been left available for trade and industry. No absolute rule can be laid down, but each case must be judged upon its merits and in the prevailing circumstances. We ourselves have certainly not followed any absolute rule. On the contrary, in our desire to induce a speedier return to prosperity and to diminish unemployment we have, during the last five years, ventured upon very heavy capital outlay. We have set on foot and carried into effect of far-reaching and carefully considered programmes of housing, roads, telephones and agricultural development. The expenditure provided for these purposes, either from revenue or from loans raised on Government credit during the past four years, amounts in round figures
to £260,000,000. In addition, we have implemented guarantees under the Trade Facilities Act and provided new guarantees for colonial development schemes for a further £40,000,000. We have already carried through a scheme for the re-organisation of electricity supplies at an estimated cost of £40,000,000 or £50,000,000.

5.0 p.m.

The total development expenditure of the present Government during their period of office already exceeds £300,000,000, and there is a further £50,000,000 of commitments in sight. These figures do not include the expenditure, principally on housing and roads, undertaken by the local authorities on the basis of Government grants, which probably fall little short of another £100,000,000. It seems only a very little while ago that we were actually being scolded and criticised from both sides of the House for an extravagant use of cash and credit upon schemes like beet sugar, trade facilities and subsidies in any form. Nevertheless we have pursued the even tenor of our way, and during the course of the present Parliament we have spent, or caused to be spent, or undertaken to spend in cash or credit, over £400,000,000. I believe this great sum has on the whole not been unwisely invested and that much of it will return to us after many days and that we have a better island to live in than we had before. The point I am coming to is that for the purpose of curing unemployment the results have certainly been disappointing. They are, in fact, so meagre as to lend considerable colour to the orthodox Treasury doctrine which has steadfastly held that, whatever might be the political or social advantages, very little additional employment and no permanent additional employment can in fact and as a general rule be created by State borrowing and State expenditure. I am not trying to draw too rigid a line and our own practice does not entitle me to do so, for we have drawn very largely on capital account. I can express my own personal view best of all by a simple illustration which is familiar to all our minds, that of the Boat Race, where the full life-energy and power of the crews must be exerted. There is always an opportunity to the one side or the other to make a spurt, and, if the
spurt is judiciously timed and wisely used, it may bring a definite advantage. It may gain a favourable position upon the river, it may possibly even secure a victory. But a spurt is only a draft in an intense form upon the total life-energy of the crew; it exhausts them to a formidable degree; and, if it fails, they are worse off than if they had simply rowed steadily on. Moreover, the race in which we are rowing is not one which has any definite ending. It goes on and on, for reach after reach, and no one can tell at what point any definite advantage can be registered. Certainly, in these conditions, the greatest possible care and deliberation should be used before ordering a spurt from a crew so hard pressed, and nothing would be more foolish, more wrong, more wanton, than for a stroke to make an exhausting spurt, not on any sound calculation of winning the race, but just for the purpose of giving the crowd on Barnes Bridge, under which he was about to pass, something to shout at. I think that all of us will be agreed upon that, or very nearly all of us.

That brings me back, oddly enough, to the proposal of the right hon. Gentleman the Member for Carnarvon Boroughs to spend £200,000,000 mainly on road construction, in addition to the already heavy programme of road and other developments which, of course, is going forward and increasing year by year. The plan of forcing road construction to such an extravagant pitch in a country which already has the best roads in the world, and which is already spending more on its roads than any country in Europe, would, I am sure, not only be of no real or lasting advantage as a remedy for unemployment, but would be positively and gravely injurious to the national welfare. This opinion does not rest only on argument or on belief. Curiously enough, as has lately been pointed out, an almost similar mistake was made 80 or 90 years ago in the frenzied enthusiasm with which the railways were promoted. In the railway construction boom round about 1845, great loans were raised for the rapid building of railways, and armies of men were employed in their construction. The demand for steel rails and rolling stock promised a most vigorous stimulus to other trades; hope and courage were high. But what happened? According to Cunningham's
"Growth of English Industry and Commerce," a standard authority, speedy trade depression and financial crisis ensued, from which it took the country several years to recover. Cunningham says, in Volume II, page 828:
The period of commercial depression was chiefly due to the vigour with which railway enterprise was taken up, and the fact that the ordinary course of commercial transactions was dislocated. In the autumn of 1845, 2,069 miles of railway were opened, with a capital of £64,000,000 odd, while 3,543 miles of railway were in progress, involving capital amounting to £74,500,000. Of course, there was no immediate return on this large amount of capital; it was for the time absolutely sunk; the investment of so much money in forms not immediately productive had the result of injuring many branches of industries and depressing commerce. In so far as the wealth devoted to railway enterprise was withdrawn from circulation in the form of wares, the effects were for the time being disastrous. The proprietors had less means available to purchase goods. Capitalists found their sales diminished; they were unable to replace their stock of materials or to continue to pay wages, until their stores of finished goods were realised; and a general stagnation resulted.
Of course, in the long run, the new railways were the foundation of a new era of prosperity, but that prosperity would have come just as surely, and probably more quickly, if we had maintained a steady methodical progress, and if, let me observe—and this is a point to be noted—the vast canal system, embodying the labours of half a century, had not been incontinently scrapped and sacrificed and ruined for the sake of overdoing a new idea. We ought, I think, to try to learn from the teachings of experience; we ought not, for the sake of a frantic development of roads, to disturb and dislocate the normal productive life of the nation, or strike a precipitate State-subsidised blow at our superb system of railways, in which more than £1,200,000,000 of capital has been sunk, and by which more than 600,000 men get their daily bread.

Orders of the Day — ROAD FUND GRANTS.

I have another announcement to make about the expenditure in connection with roads. During the Debates on the Local Government Bill, I declared a further increase in the percentage grants for the maintenance of classified roads and bridges—an increase from 50 per cent. to 60 per cent. in the case of Class I,
and from 334 per cent. to 50 per cent. in the case of Class II roads. That was at a cost of £2,600,000 a year, with consequent relief to rates, and especially to county rates. I am glad to say that the balance of the Fund at the end of the year has turned out to be larger than was expected; it amounts to about £4,500,000. We propose, therefore, now to make a corresponding increase in the percentage grants for road improvements and new construction. For the year 1929, the normal road grants for these purposes will be 60 per cent. of the approved cost in the case of Class I roads, and 50 per cent. in the case of approved schemes for all roads and bridges other than Class I; and, as an inducement to local authorities to assist in the transference of labour from depressed areas, we have decided to give an additional grant of 15 per cent. in respect of all schemes on which not less than 50 per cent. of men drawn from such areas are employed, provided that they are engaged through the Employment Exchanges. The additional allocation in the Road Fund Budget for these purposes, as well as for those of accelerating the reconstruction of weak bridges in private ownership on important roads—

Mr. MacLAREN: Sending up the land values!

Mr. CHURCHILL: We all know that the hon. Gentleman has a bee in his bonnet on that point—and the replacement of level crossings by bridges, is estimated to bring the total expenditure out of the Road Fund this year up to £23,000,000, as compared with £15,000,000 a year when the Government took office. This substantial contribution towards the aggregate road expenditure of this country, which now approaches £60,000,000 a year, is, in my view, as much as we can prudently afford to take from the national income at the present time.
Returning to the main argument, in our deliberate view unemployment can only be reduced to the normal by the revival of industry as a whole, and especially by the revival of the basic industries. Such a revival will draw men and women now unemployed through a thousand channels back into their own trades, or into kindred employment for which their previous training has not un-suited them. That is far preferable to
setting the unemployed to work in masses on road construction or other forms of public works, even if such a plan could be carried out upon any large scale for any length of time. In some quarters it has been urged that the Government should seek for opportunities of utilising the national credit for stimulating general trade, and, in particular, for assisting in the process of rationalisation. Such transactions are far better dealt; with in the sphere of regular business than by the direct intervention of the Government. What can be done in this sphere is well exemplified by the Lancashire Cotton Corporation, formed, under the auspices of the Bank of England. I have reason to believe that the City of London is willing and anxious to assist when similar cases arise in other basis industries.

Orders of the Day — RAILWAY PASSENGEK DUTY.

I am glad to be in a position to make one modest, but immediate, contribution to a policy of the modernisation of our industries. There is no doubt that the railways have much more to give to the revival of industry, and especially of basic industries, than the roads. Heavy traffics, bulky agricultural traffics, and, above all, mineral traffics, have no other transport comparable for economy or efficiency with railway transport. Last year we inaugurated a reduction of railway freights upon selected heavy traffics. This is the first instalment of the policy of rate relief to come into force, and it has already amply justified itself. Now we have another contribution to propose, which should make for the greater efficiency of railway transport. For nearly a hundred years there has been a Railway Passenger Duty levied upon the railway companies, yielding to the Exchequer nearly £400,000 a year. The railway companies have repeatedly sought relief from this tax, which they regard as an invidious survival. Subject to the approval of Parliament, I have offered to meet their wishes, but only on one condition, namely, that the capital equivalent of the whole of this relief from taxation, amounting to £6,500,000, should be used as an additional stimulus for the development and modernisation of railway transport. The works contemplated will include such items as port equipment, terminal facilities, marshalling yards,
and the adaptation of the railway system for dealing with heavier rolling stock. If Parliament approves of these proposals, the principal railway companies have undertaken to submit a list of schemes which will be put in hand forthwith, and upon which work will be effectively begun within the present financial year. That is all that I have to say at the moment on the problem of railways, but it is by no means all that can be done in that field. The repeal of this Duty will cost £300,000 in the present year.

Orders of the Day — DE-RATING.

After all, however, the best and surest help we can carry to productive industry, and, through productive industry, to employment, is by a reduction of the burdens which enter directly into the cost of production, or which deplete the capital accumulations upon which, in modern times, industry can alone develop. We have in the Suspensory Fund a realised surplus of £22,500,000. I propose to use this for the purpose of making a very important remission of taxation, a remission of a most onerous and invidious form of taxation, namely, the local rates upon productive industry. After the current payments, three-fourths of the rates upon productive industry, and the whole of the rates upon agriculture, will be abolished. I think I mentioned this last year in my Budget speech, and my right hon. Friend the Minister of Health has had to refer to the subject several times in the interval. This is because it was necessary to obtain Parliamentary authority for the accumulation in the Exchequer of the necessary funds and also to pass legislation to enable them to be applied in the most useful manner.

Of course, it would have been much nicer if we could have kept this quiet all this time and if I could have announced it for the first time now, but unhappily in a world of reality—and Governments and Chancellors of the Exchequer are painfully anchored to reality—it is often necessary to make long preparations in order to secure any large or permanent advantage. However, the period of preparation is over. The necessary laws have been passed by Parliament, the necessary funds have been gathered, and we are in a position
to abolish this year three-quarters of the rates upon productive industry of all kinds and the whole of the rates upon agriculture. That is the best, and by far the greatest, gift which it is in our power to bestow. We have saved up for it, we have toiled for it, and we can now bestow it. The £22,500,000 is not needed for the rating scheme in the year 1929. During this year the yield of the Petrol Duty, £15,700,000, will be sufficient to meet the half-year's relief to industry and agriculture, but in 1930 the full scheme of rating relief comes into operation and the Exchequer will provide in relief of local rates nearly £36,000,000 of new money. In that year the Petrol Duty should yield £17,000,000 and £3,000,000 will be provided from the Road Fund, leaving less than £16,000,000 to be taken from the Suspensory Fund, which we hope by that time will be increased by any surplus resulting from 1929. Thus the finance of this vast scheme of tax remission is fully provided for till the year 1931. Thereafter we must look to the normal increase of revenue which, even in these bleak years, has shown a steady annual rise and which during the last year has definitely exceeded expectations.

But, apart from the normal growth of the revenue, there is one special additional factor on which I think I am entitled to dwell. Before the great disaster to the coal industry occurred—[Interruption.] I must describe what happened. Something happened in 1926. To put it in the least controversial way, before what happened in 1926 happened, the principal basic trades of the country yielded profits assessable to Income Tax of £150,000,000 a year. In the present Budget I am counting upon less than £100,000,000 of profits from this same group of trades. It seems probable that a definite and solid revival of prosperity in the basic trades has now begun, but even if these trades do no more than regain in 1932 the levels at which they stood in 1923 and 1924 an addition of at least £10,000,000 would be made to Income and Super-tax on that account alone. Indeed the improved prospects of the revenue and the increase in the Suspensory Fund encourage and justify a further step forward at present in the relief of productive industry.

Orders of the Day — AGRICULTURAL PRODUCERS (RATING RELIEF).

We have been repeatedly pressed to bring the reliefs into operation at the earliest possible date. We have already hastened the freight relief upon selected traffics. Instead of the £18,000,000 in the suspensory fund which I originally budgeted for, or the £14,000,000 which was all I had a right to expect at the end of the Summer Session, we have now £22,500,000. We propose, therefore, to bring the relief of rates upon agricultural producers into immediate operation. The farming community will not have to wait until October. They will be freed from the burden of rates as from the beginning of this month. This earlier relief costs £2,500,000, a sum which in its happily reinforced condition the suspensory fund can properly bear. A short Bill will be necessary before the Dissolution, non-controversial I have no doubt, to allow this further relief and to enable the Exchequer to make good to the local authorities the £2,500,000 which they would otherwise be collecting from the agricultural producers. The Bill will be introduced immediately after the Budget Resolutions.

I have anxiously considered whether it would be practicable to ante-date in a similar way the relief to manufacturing production. The rates upon agriculture have already for many years been divided under the workings of the Agricultural Rates Acts. They have been divided between productive and residential properties and, therefore, it is a simple matter to remit the rates upon land and buildings used for agricultural production. In the case of industry the frontier line is now only for the first time being drawn between those hereditaments which fall within the scope of our legislation and those which fall outside it. There is no assured basis, therefore, upon which the relief on productive industry can be ante-dated. Industry must still wait until October, but agriculture can receive its relief at once.

Orders of the Day — DIRECT TAXATION.

After allowing for all the minor concessions or remissions, we are still left with a prospective surplus of £10,246,000, out of which I think the taxpayer is entitled to some further relief. The Super-tax payer, with an in-
vestment income has received, of course, nothing in the present Parliament, because the relief of £10,000,000 which he gained in 1925 was at the same time, as is so often forgotten, exactly cancelled out by the increase of Death Duties on the same class of fortunes.

Miss WILKINSON: He can only die once, but he gets the relief every year.

Mr. CHURCHILL: The hon. Lady must possess her soul in hope. I can assure her she will not be wholly disappointed. Nevertheless, the Super-tax payer must, I think, be left to contemplate with what equanimity he can the ferocious onslaught which we are assured the Socialist party intend to make upon him. The Income Tax payer has, however, received substantial relief. He has received a relief of 6d. in the standard rate, and this relief, in the case of the smaller class of Income Tax payer, and especially the man with a family to bring up, has been multiplied several times over by the cumulative rebates and allowances made in the Budgets of 1925 and 1928. I should like the Committee to realise how very important, and indeed decisive, these reliefs have been. Take the case of a married man with three children whose income is all earned. On an income of £400, such a man paid in 1924 £5 1s. 3d. in taxation. He now pays nothing. Such a man with £500 a year paid in 1924 £15 3s. 9d. He now pays £3 3s. 4d. That is equivalent to a reduction in the standard rate of Income Tax of 3s. 7d. in the £. With an income of £600 he paid in 1924 £25 6s. 3d. He now pays £11 10s. That is equivalent to a reduction in the standard rate of 2s. 5½d. in the £. On an income of £700 a year, he paid in 1924 £45 11s. 3d. He now pays £19 16s. 8d., or a reduction of 2s. 6½d. in the £. On an £800 a year income, instead of paying £65 odd, he now pays £33, or a reduction of 2s. 2d. in the £. On an income of £900 a year, instead of paying £86 odd he pays £50.

Mr. GRIFFITHS: Are these miners?

Mr. CHURCHILL: Does the Labour party take no interest in the affairs of the smaller class of Income Tax payers?—a reduction of 1s. 10d. in the£? On an income of £1,000 a year, where £106 odd was paid in 1924, £67 is paid now, a reduction of 1s. 8d. in the £. On an
income of £1,500 a year, where £207 was paid in 1924, £150 is paid now, a reduction of 1s. 3d. in the £. Of course, where the income is derived from investments, or where the taxpayer has fewer or no children, or is unmarried, the scales are less favourable, but the reliefs are none the less real and important throughout the whole range of incomes under £1,000 a year. Indeed, an immense process of relief graduated downwards has been carried out in this Parliament, and that large class, comprising more than half the Income Tax payers, all of what are called the black-coated working men, the brain workers, professional men, technical experts, the "intelligentsia," to use the Moscow jargon, upon whose abilities, attainments and exertions the forward movement of scientific civilisation depends—

Mr. MacLAREN: Rhetoric!

Mr. CHURCHILL: It is a fact which is brought bitterly home to every country that ignores it—have gained very great and well-deserved benefit, costing in the present year £2,500,000 more than they did in the Budget of last year. I can do no more for this class in this Budget, and my gaze now rests upon the indirect taxpayer.

Orders of the Day — TEA DUTY (ABOLITION).

I have never had much fiscal sympathy with the consumer, of luxuries, and particularly of foreign luxuries. It is to the primary comforts and to some extent virtual necessities of the mass of the population that we should now turn our attention. I have already spoken of the immense boon of at least £160,000,000 a year conferred upon the wage-earners by the reduction in the cost of living. Compared with that universal easement, anything the present surplus can bestow must necessarily be small. We reduced last year the tax on sugar at a cost of £3,000,000 of revenue, and it is to tea that I now turn with feelings of good will. The Committee know, from the annual Debates in this House, that I have long desired to effect some reduction in the Tea Duty. There is no other comfort which enters so largely into the budget of the cottage home, or the still humbler budgets of the old, the weak, and the poor. The reduction or the removal of the tax on tea has been asked for in a
long succession of Parliaments. Its mitigation would always have been regarded by social reformers of every party as an auspicious milestone in the history of the Custom House. There has been a tax on tea ever since the reign of Queen Elizabeth, and I am glad to think that the reign of His Majesty King George the Fifth will witness the total, immediate, and, I believe, final abolition:
And while the bubbling and loud-hissing urn
Throws up a steamy column, and the cups That cheer but not inebriate wait on each, So let us welcome peaceful evening in.
I said that the remission would be total and I have said so advisedly, and, although over three-quarters of the tea drunk in these islands is produced within the British Empire, Javanese tea enters to a great extent into the cheapest blends used by the poorest people. To maintain for preferential reasons a tax on this foreign tea would therefore exclude from the benefits of remission the very class for whose sake, most of all, this serious sacrifice of revenue is being made.

I am not dealing in the present Budget with the duties on coffee, cocoa and chicory, and although the cocoa group has usually moved up and down with the Tea Duty, there is no essential reason why they should be inseparably connected, and there are Gladstonian precedents for the independent treatment of tea. The cost of the abolition of the tax on tea is £6,150,000 in the present year. The repeal will date from the 22nd April next. I have every reason to believe that an effectual reduction of 4d. in the lb. in the price of tea will reach the consumer immediately. With the abolition of the Tea Duty, the proportion of our revenue raised from comforts, that is to say the remaining breakfast table duties, coffee, cocoa, chicory, sugar and also from matches, falls from 4.43 per cent. under the Labour administration to 2.91; by far the lowest percentage ever known.

Orders of the Day — BALANCE OF BUDGET.

I can now balance the Budget of 1929 with an expenditure under all heads, including the rating relief, the Sinking Fund, and the self-balancing accounts, of £822,584,000 and with a revenue of £826,680,000, leaving a final prospective
surplus of £4,096,000. I hope that this surplus may be increased, as the last two surpluses have been, by further savings by the departments during the year, and that in any case this will be sufficient to pay the usual inevitable expenditure on Supplementary Estimates for minor contingencies. My intention is, if I should remain responsible, that whatever surplus is realised at the end of the year, should go, like its predecessors, to strengthen the Suspensory Fund and still further lengthen the period before the full weight of the new rating reliefs measures itself against the expanding revenues of the Exchequer.

Orders of the Day — PROCEDURE.

I will now explain an important departure in procedure upon which we have resolved. It arises naturally and inevitably from the circumstances in which we stand. Everyone wishes to proceed as soon as possible to the General Election, and all parties are making arrangements on that basis. The limits of Parliamentary time are therefore fixed with much rigidity. We have only a very few days. On the other hand, I must present the Budget scheme for the finances of the year in its integrity. That cannot be done in any Finance Bill which can receive the Royal Assent before the General Election. We therefore propose this year to have two Finance Bills. The first will contain only the necessary provisions to express the Government policy and carry on the public services. All the complicated consequential Clauses will be left to the new Parliament. The Opposition, if successful in the battle, will have the pleasure of passing or repudiating all the machinery Clauses, and will have plenty of time to do so. The first Finance Bill will therefore contain only those—

Lieut.-Commander KENWORTHY: You are running away from it.

Mr. CHURCHILL: On the contrary. It will contain only those Clauses necessary to the protection of the revenue, namely, the continuance of the Income Tax and its very small companion, the duty on hops; the repeal of the Tea Duty and of the Betting Duty on turnover, and the repeal of the Railway Passenger Duty. Concurrently with this first Finance Bill, a White Paper will be laid setting forth the draft Clauses left to be dealt with in the new Parliament. They are not
of an exciting character at all, but may easily take a long time. It follows from this procedure that we do not intend this Session to move the general Resolution for the Amendment of the Law. It will, therefore, not be open to hon. Members to move a long series of new Clauses setting forth electioneering lures and wiles until after the election has taken place. It will not be possible, for instance, to bring forward new Clauses of a vote catching character for greatly improving the universe and then forcing the supporters of any responsible Government to vote against them. On the other hand, the Government will facilitate by every means in their power the fullest possible general discussion upon the Budget proposals as a whole, and it may be that the repeal of the Tea Duty, if the permission of the Chair can be obtained, will afford a convenient vehicle for such a Debate. This will conduce to the efficient despatch of public business and the convenience of the House.

Orders of the Day — GENERAL SUMMARY.

In this very lengthy statement, during which the House has shown me such exceptional consideration and indulgence, I have thought it right to lay forth fully the financial situation, but I have not attempted to deal with the wider issue of Imperial and social development which will naturally constitute the main portion of the programme upon which His Majesty's Government intend to submit themselves to the country. I have confined myself to that considerable range of business which directly affects the finance of the present year. The main policy which we should pursue in the new Parliament will be set forth by my right hon. Friend the Prime Minister, at what may be called an early and a suitable occasion. I should like, therefore, in presenting my fifth Budget to add a very few words of general summary. Anyone can see that the coal disasters of 1925 and 1926 created a situation very different from that with which I hoped to deal. If I could have foreseen the lamentable course of events, I should certainly not have remitted 6d. from the Income Tax in 1925, but once the standard rate had been reduced to a clear cut figure like 4s. in the £, it would have been very injurious and very vexatious to raise it again. Neither did I wish in any way to detract from the great remissions of in-
direct taxation which had made the Budget of my predecessor in 1924 memorable. The last three years have been a struggle on my part to avoid reimposing either oppressive direct taxation or trenching upon the relief of the taxation of the comforts of the people which he had given. In this, I claim to have been successful. I have maintained, upon the average of the five Budgets, payments to the Sinking Fund and upon the accumulated interest of Savings Certificates substantially greater than those which were made in former days.

The successful re-establishment of the Gold Standard will still be regarded as a memorable event long after the exertions and sacrifices it has entailed have been forgotten. The preferences upon Empire products, notably upon wine, sugar and tobacco, have been carried to the furthest point that they have yet attained with a remarkable accompanying growth of inter-Imperial trade. I have spoken already of the remissions of taxation which it has been possible to effect. As far as expenditure is concerned, the upward trend has been stopped. It has proved beyond my power to reduce it as much as I had hoped. At any rate, it has been controlled, and it is £6,000,000 less, on a strictly comparable basis, than it was five years ago. Notwithstanding all this, the means have been found to inaugurate and to finance for periods extending far beyond the lifetime of the present Parliament the two most considerable Measures of domestic reform with which I am acquainted, namely, the immense extension of the Pensions and Insurance scheme in 1925, and the relief of productive industry and the rating reform scheme of my right hon. Friend the Minister of Health, in 1928.

I feel that the corner in our economic fortunes may well now have been turned. There are no causes, apart from fresh causes of our own making, which should prevent the next four or five years being easier and more fruitful than those through which we have made our way. The future lies freely in our hands. Reviving trade, lower unemployment, expanding revenues, cheaper money, more favourable conditions for debt conversion, lie before us at this moment as reasonable and tangible probabilities.
We can by wisdom and public spirit bring them nearer and realise these long sought for advantages. We can by faction, violence, and folly drive them far away again. The future is inscrutable, and it is equally vain to prophesy or boast, but for my part I have faith in the fair play and august common sense of the British nation, and to their judgment now, and in later years, I submit with confidence the financial record of a Conservative Administration.

Orders of the Day — CHARGE OF INCOME TAX.

Motion made, and Question proposed,

"That—

(a) income tax for the year 1929–30 shall be charged at the standard rate of four shillings in the pound, and in the case of an individual whose total income from all sources exceeds two thousand pounds, at the same higher rates in respect of the excess over two thousand pounds as were charged for the year 1928–29;
(b) all such enactments as had effect with respect to the income tax charged for the year 1928–29 (other than subsection (3) of section twenty-nine and subsection (2) of section thirty-two of the Finance Act, 1926, and section twenty-eight of the Finance Act, 1927), shall have effect with respect to the income tax charged for the year 1929–30;
(c) the annual value of any property which has been adopted for the purpose of income tax under Schedules A and B for the year 1928–29 shall be taken as the annual value of that property for the same purpose for the year 1929–30:

Provided that the foregoing provision relating to annual value shall not apply to lands, tenements and hereditaments in the administrative county of London with respect to which the valuation list under the Valuation (Metropolis) Act, 1869, is by that Act made conclusive for the purposes of income tax.

And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."—[Mr. Churchill.]

Mr. SNOWDEN: I am sure that the Committee is in no mood, after listening to the lengthy, not too lengthy, statement of the Chancellor of the Exchequer, to hear more speeches now. I propose to follow the precedent of previous years and to confine my observations, in the main, to congratulating the Chancellor of the Exchequer upon a speech of a very exceptional character, and not wanting in the least in his accustomed eloquence and scintillating rhetoric. From the
statements which have appeared in the newspapers for the last two or three days, we had been led to expect the type of speech that the Chancellor of the Exchequer has delivered. We were told that he was spending 16 hours a day in preparing those scintillating epigrams which afford so much entertainment to Members on the other side of the House. It is a pity for the purpose for which this type of speech has been prepared and delivered that it will not appear quite so entertaining when it is read in the newspapers to-morrow morning.
The right hon. Gentleman was expected to do something to restore the declining fortunes of the Tory party. He was their one remaining asset. It remains to be seen whether his Budget will prove to be of the electoral value which, I have no doubt, the right hon. Gentleman expects it to be. In his concluding observations, the right hon. Gentleman said that he had confined his statement to financial matters, wholly. I have heard something like 20 Budget statements, and I must say, without any disrespect to the right hon. Gentleman, that I have never heard a Budget statement which has travelled to such an extent outside the proper purposes of a Budget speech as that to which we have just listened. Of course, the explanation is quite clear. The right hon. Gentleman could not resist the temptation to forestall the speech which the Prime Minister is expected to make in the country. That has been a characteristic of the speeches of the present Chancellor of the Exchequer.
I have given various descriptions to previous Budgets of the right hon. Gentleman. There is one description of this Budget which I am sure will have occurred to the minds of all hon. Members who sit on this side of the House. It has not been a Budget statement; it has been an election manifesto. The description that will be given of this Budget will be that of a bribery Budget. On more than one occasion the right hon. Gentleman has said that a General Election is a very expensive thing for the Treasury. He has proved that to be true. There are few of the concessions which he is proposing in this Budget which would have been made were it not that the Budget is presented on the eve of a General Election. A more shameless piece of election bribery has never been
presented by any political party. We have had the spectacle of the Tory party trying to win the coming General Election by using public funds for party purposes.
I shall have more to say about the details of the proposals at a later stage of our proceedings, but there is one feature of the Budget which is different from the features of all the right hon. Gentleman's preceding Budgets. Under his fascinating rhetoric and engaging personality, the right hon. Gentleman has in previous Budgets managed to convey the temporary impression that his Budget was a good Budget and contained proposals which it would be difficult to oppose. I have even found some of my hon. Friends behind me, at the conclusion of one of the right hon. Gentleman's Budget statements, feeling somewhat depressed for the moment. I have never been depressed; I know the right hon. Gentleman too well. That mood of depression has never lasted long, because as soon as we have had an opportunity to get away from the mesmerism of the right hon. Gentleman the real character of his proposals has been made quite clear.
I have said that it is customary on these occasions to confine one's observations to those of a complimentary character. I am doing the best I can. Perhaps I shall be able to improve upon it to-morrow. At any rate, I can honestly and sincerely say that the right hon. Gentleman's speech has been in his best style. I always like to hear the right hon. Gentleman when he is in the mood in which he was this afternoon. I know no man who enjoys his own rhetoric and his own epigrams so much as the right hon. Gentleman, and he certainly has provided himself, if not others, with an abundant fund of enjoyment this afternoon. Upon that, I do most heartily congratulate him. I have doubts at the moment, doubts which, I think, experience will strengthen, that the purpose of his speech will not be fulfilled. Hon. Members opposite are far better qualified than I am to judge the intelligence of their own supporters, because they know them, but, if the right hon. Gentleman and the Government think that the intelligence Of the country is so low that it cannot see through the purpose of this Budget, they will be mistaken.
The right hon. Gentleman has given a good deal more provocation to the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who will follow me, than to myself. He is never very severe on me. I never have any reason to complain of the right hon. Gentleman's treatment of myself. He is really a good sportsman. He does not mind being hit hard and he hits back, but I think he always hits above the belt.
6.0 p.m.
Perhaps I had better delay until to-morrow saying farewell to the right hon. Gentleman. His speech this afternoon was of the nature of a swan song. I think the result of the General Election will be that the right hon. Gentleman will be relieved from the onerous responsibilities which have borne so heavily upon him during the last five years, and he will be able to find greater leisure for the exercise of a craft in which I believe he has become highly efficient. I see on the hoardings bills which state that the Conservatives have built something like 800,000 houses during the last five years. We have heard what an expert bricklayer the right hon. Gentleman has become, but it is surprising that the activities of the Conservatives in that enterprise have been so extensive. The right hon. Gentleman will have abundant leisure to engage more fully in that craft, and we may expect to see the housing output of the Conservative party considerably increased. I am sure that the right hon. Gentleman is highly pleased with himself at the moment, but I doubt whether he will be quite so pleased with himself when he reads the newspaper comments upon his speech, even the newspapers which generally support his party. I assure hon. Members opposite that I make no complaint about the nature of the Budget. It is just the kind that I expected, but if hon. Members opposite think it is going to be of advantage to them in the election upon which we are about to enter, they are seriously underrating the intelligence of the electors of the country.

Mr. LLOYD GEORGE: I do not propose to speak for more than a few minutes, and I shall confine myself to the usual conventional intervention on these occasions. At the same time, my
agreement with the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) as to the quality of the speech to which we have just listened is certainly not conventional. We have been led to expect a very fine rhetorical performance, and the right hon. Gentleman has lived up to the expectations of his friends and those who appreciate his brilliant qualities. From that point of view, it was certainly one of his greatest performances. I do not propose to follow him in the criticisms which he passed upon certain proposals that I have made to the country—the Budget will be examined on behalf of my friends by the right hon. Member for West Swansea (Mr. Runciman) who will take part in the Debate to-morrow—but there are just a few observations which I must make. I do not complain that the right hon. Gentleman the Chancellor of the Exchequer has made an electioneering speech. It would be more than ordinary human nature, and certainly his human nature, to resist the temptation, seeing that we are within a few weeks of a General Election. That is a perfectly legitimate purpose, but what I object to is the sort of high moral line which he took about everybody else who had any electioneering ideas in their minds. He talked about their low mentality—I believe he said their moral mentality—but there is nothing in this Budget which we have not been led to expect by intelligent anticipations which have appeared in the newspapers, and I can well understand, having heard it, that these prognostications will provoke a good deal of anticipatory disappointment in the minds of some of his best friends. That disappointment will grow from day to day and from week to week.
I do not think the right hon. Gentleman has risen to the great opportunity which opened to a Chancellor of the Exchequer when dealing with the country in its present emergency. He was severe on me for making certain suggestions with regard to borrowing for public works upon the basis of a fund which would liquidate both interest and capital in the course of a few years, but at the same time he made the boast that, whereas I was going to borrow £200,000,000, he had actually raised £400,000,000 for kindred purposes. If the £200,000,000 is such an outrage on high finance, if it is such a withdrawal of money from ordinary in-
dustry that no sound financier would contemplate it at all, why should it be right for him to withdraw £400,000,000 and spend it in such a way, according to his own statement, that industry got little out of it? His statement is that £400,000,000 has been spent and that practically nothing substantial has been provided by the expenditure. It shows how badly the money has been spent.
Let me say a word with regard to the railways. The right hon. Gentleman referred to the Cunningham Scheme and deprecated the action of our forefathers in raising £64,000,000 in one year and £74,000,000 in another year for the purpose of constructing railways. In the first place, the right hon. Gentleman knows that £64,000,000 and £74,000,000 in those years would be equivalent to something like £400,000,000 to-day, and that the withdrawal of £64,000,000 and £74,000,000 from the surplus available for investment at that time would be a much more serious thing than the withdrawal of £100,000,000 to-day. May I put this to him? What is his argument? Is it that railways ought to be built out of current revenue? Does he suggest that no money should be borrowed for the purpose of constructing railways? The sum of £64,000,000 or £74,000,000 may have been too high a figure in proportion to the savings of the country at that time, but nobody is proposing to borrow the same proportion to-day. The right hon. Gentleman has apparently confined his study of Cunningham to the particular quotation. Has he ever read the whole story of how the construction of railways solved the problem of unemployment? Before that period, there was dire unemployment and suffering in the country, and the unemployment was increased by the perfection of industry. It was the railways which enabled the people of this country to bridge over the gap between the time when the perfection of machinery increased the wealth of the country and the opportunities for employment. The whole question is, as the Chancellor of the Exchequer has pointed out, whether they were necessary.
He talked about roads as mere racing tracks. It shows that the right hon. Gentleman has not studied the elements of the problem. Each year you have 500,000 commercial vehicles running along the roads. They are increasing year by
year. If he had studied his own revenue, he would have realised the extent to which this has grown. The chars-a-banc are not there for racing purposes. They have enabled the population of the towns for the first time to get out into the open country, and it is no use talking about a serious problem of this kind—which is here as a fact and which will have to be dealt with—as if it were merely a matter of providing tracks for luxury motors. The roads are used more and more for the purpose of distributing goods from door to door. At the same time the railways must form part of the transport system of the country, and I shall support the right hon. Gentleman's proposal for taking off the Railway Passenger Traffic Duty. When I was at the Board of Trade I did my best to induce the railways to deal with this question. Does the Chancellor of the Exchequer forget that last year the railways themselves realised the importance of motor traffic, and came to the House of Commons to secure powers to enable them to utilise the roads for the purpose of carrying goods from the warehouses right to the doors? It is no use talking about this problem as if it were merely a question of roads versus railways. The two must work together.
The right hon. Gentleman has said that the roads of this country are perfect. They are; and they are perfect because of a fund which was raised by the Government of which he and I were Members for the purpose of improving the quality of the roads. But no new roads or tracks of any kind, as far as I can recall, have been initiated by the present Government. He has a Committee sitting in London at the moment, upon which some of his own supporters are represented, and they have condemned the Government because schemes of which they have approved were not put into operation. It is no use treating a serious problem of this kind as if it were merely a matter of roads against railways. The question of the preparation and initiation of greater facilities for the purpose of carrying this great motor traffic cannot be treated as if it were a mere matter of providing racing tracks for motors.
I do not think it is unreasonable for the right hon. Gentleman to propose that the Budget should be divided into two
parts. He is quite justified in that proposal. It would be quite impossible in the time available between now and the General Election to have a thorough examination of the suggestions for amendments of the law which crop up every year, and I think the Chancellor of the Exchequer is perfectly right in confining the part of the Budget which he is to carry through before the General Election to the taxing part, the part essential for the collection of revenue and also his proposals with regard to agriculture.
There is, however, one part of the right hon. Gentleman's scheme of finance which I think is a novelty. He is the first Chancellor of the Exchequer who has ever budgeted for a great deficit for his successor. He has accumulated something which he calls a Suspensory Fund which will carry the Exchequer through this year, next year, and half the following year, but the time will come when the country will have to finance a burden of £36,000,000 with something like £20,000,000 or £22,000,000. Someone will have to find that £14,000,000. The right hon. Gentleman has taken away some indirect taxes. To that extent, he will cripple his successor. On these benches, we have always voted for the abolition of the Tea Duty, and that is a matter on which we cannot quarrel with the right hon. Gentleman. But somebody sitting in his place will have to deal with this problem at a later date; and I understand from the newspapers that, if the present Government have a majority at the next election, the right hon. Gentleman does not contemplate continuing his financial responsibilities. Therefore, someone will have to find this money, and I cannot recall a single case in which the Finance Minister of this country has made arrangements for expenditure which left a deficit to be provided for by his successor. At least, £14,000,000 will have to be found. The right hon. Gentleman says there is the natural growth of the revenue, but the natural growth of the revenue has never been hypothecated two or three years in advance, and it is quite possible to have a reduction in the amount of the Income Tax without having a real reduction in revenue. If, for instance, you have a fall in prices, if in the next few years you get the same
basis of prices as before the War, you might have a smaller Income Tax, while at the same time the country was enjoying greater prosperity. The Chancellor of the Exchequer has not taken any of these things into account. He has budgeted for a deficit to be met two or three years hence by his successor. I know it is not usual on these occasions to enter into any criticisms, and I would not have done so if the right hon. Gentleman had not made special reference to two or three matters for which I am responsible. I enjoyed his jokes very much. I think they were worth three weeks' preparation. I am, however, in complete agreement with those who, knowing what is in the Budget, hold the opinion that from the point of view of dealing with a very grave situation in the country it is extremely disappointing.

Question put, and agreed to.

Orders of the Day — REPEAL OF DUTY ON BETS.

Resolved,
That the Excise Duty payable on bets made with a bookmaker shall cease to be chargeable as from the sixteenth day of April, nineteen hundred and twentynine."—[Mr. Churchill.]

Orders of the Day — REPEAL OF RAILWAY PASSENGER DUTY.

Resolved,
That the Railway Passenger Duty shall cease to be chargeable as from the first day of April, nineteen hundred and twentynine."—[Mr. Chwchill.]

Orders of the Day — CONTINUATION OF DUTIES CHARGED BY SECTION 7 OF FINANCE ACT, 1925, ON HOPS, PREPARATIONS OF HOPS AND BEER.

Motion made, and Question proposed,
That—

(a) The duties of Customs charged by Section seven of the Finance Act, 192S, for a period of four years beginning on the sixteenth day of August, nineteen hundred and twenty-five, on hops and extracts, essences or other similar preparations made from hops and the additional duty of Customs charged by the said Section for the said period on beer, shall continue to be charged for a further period of four years from the date on which the aforesaid period expires, except that hop oil shall, as from the said date, cease to be chargeable with duty as a preparation made from hops and in lieu thereof a duty of Customs at the rate of twenty shillings the ounce shall be payable on hop oil during the said further period; and
(b) The additional Excise drawback payable under the said Section for a period of four years beginning on the sixteenth day of November, nineteen hundred and
77
twenty-five, in respect of beer shall continue to be allowed for a further period of four years from the date on which the aforesaid period expires; and
(c) Section ninety-eight of the Customs Consolidation Act, 1876 (which relates to the charging of duty on the quantity of goods ascertained by weight, measure or strength at the time of the actual delivery thereof) shall apply to hops when cleared from a warehouse for home use."—[Mr. Churchill.]

Lieut.-Commander KENWORTHY: In view of the restricted opportunities that we are to be given, I think most improperly and unconstitionally, as announced by the Chancellor of the Exchequer, I must take this opportunity of asking a question which affects my constituency. It arises out of the Resolution which has just been read out. I refer to the Duty on hydro-carbon oils. As a result of over a year's experience of these duties, as we expected, grave disabilities have been imposed on those who use turpentine as a raw material in manufacture. The Financial Secretary to the Treasury will be aware that many representations during the last few weeks have been made to the Chancellor of the Exchequer on behalf of these manufacturers. I rise now to ask whether any hope can be held out of a rebate being granted on turpentine, which cannot be used in any way in internal combustion engines.

The DEPUTY-CHAIRMAN (Sir Dennis Herbert): The hon. and gallant Member is wrong in his assumption. Hydrocarbon oils are not dealt with in the Resolution.

Lieut.-Commander KENWORTHY: I am very sorry if I am wrong. I could not clearly hear what was read out.

The DEPUTY-CHAIRMAN: The Resolution referred to hop oils. I am afraid that the hon. and gallant Member was not listening to the Resolution.

Lieut.-Commander KENWORTHY: I was listening with great attention. If I am wrong I apologise, but the opportunities for raising these matters, which are of great importance to our constituencies, are very restricted, and I have to take what chance I can.

The DEPUTY-CHAIRMAN: The hon. and gallant Member cannot deal with the subject now.

Lieut.-Commander KENWORTHY: Then I pass from the subject. My final remark is to protest against the action of the Government in removing the rights of the subject, as represented in this House, to control taxation.

Question put, and agreed to.

Orders of the Day — ABOLITION OF THE CUSTOMS DUTY ON TEA.

Motion made, and Question proposed,
That the Customs Duty chargeable on tea until the first day of August, nineteen hundred and twenty-nine, shall cease to be chargeable as from the twenty-second day of April, nineteen hundred and twenty-nine."—[Mr. Churchill.]

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Commander Eyres Monsell.]

Resolutions to be reported To-morrow.

Committee also report Progress; to sit again To-morrow.

The remaining Government Orders were read, and postponed.

Orders of the Day — TURPENTINE.

Motion made, and Question proposed, "That this House do now adjourn."—[Commander Eyres Monsell.]

Lieut.-Commander KENWORTHY: I wish to put a question to the Financial Secretary to the Treasury. I am giving him very short notice, but I am sure that with his usual courtesy he will not fail me. Has his attention been drawn to the number of resolutions sent to the Treasury by the turpentine users in the manufacturing community? Turpentine is a vegetable oil which cannot be used in internal combustion engines, but nevertheless it is subject to fourpence a gallon tax. The manufacturers have been bombarding the Treasury with representations on the subject. I listened with great attention to the Chancellor of the Exchequer's speech, but the right hon. Gentleman did not see fit to deal with the matter, which affects the manufacture of paint and varnish and many other commodities. Turpentine is taxed to the tune of £100,000 a year, and that is done because the Chancellor of the Exchequer wanted to tax petrol. I could give a long list of the trades affected.
In view of the importance of the matter I think that some answer is called for from the Treasury, and I invite the Financial Secretary to say whether he will be good enough to look into the matter and see if this modest concession cannot be made.

The FINANCIAL SECRETARY to the TREASURY (Mr. Arthur Michael Samuel): I appreciate the courtesy with which the hon. and gallant Gentleman—

Mr. SPEAKER: Before the hon. Gentleman replies, I would like to know
whether this concession would call for legislation.

Mr. SAMUEL: I assume that it would. Mr. SPEAKER: In that case, we cannot discuss it.

Lieut.-Commander KENWORTHY: Then I hope I may be allowed to raise the matter on another occasion.

Question put, and agreed to.

Adjourned accordingly at Twenty-eight Minutes after Six o'clock.